Turn the Tide Unlock the new consumer path to purchase Deep-dive: E-Commerce

June 2020 Consumer behavior The new normal Businesses must unlock has fundamentally has transformed the the new normal to help changed purchase pathway revival

Turn the Tide Copyright by Boston© 2020 Consulting Group. All rights reserved. Unlock the new normal Great [leaders] rejoice in adversity just as brave soldiers triumph in war —Lucius Annaeus Seneca Covid-19 is a global pandemic

However to win in the current situation, companies need to tailor strategies to today’s unique context and look through layers

Facebook company T urn the Tide Unlock the new normal Despite this pandemic, signs of recovery are starting to show

Pandemic spread in different degrees across the globe India gradually moving towards opening up economy3 ; E- commerce unrestricted for all categories from Lockdown 4.0

As of 22 June 2020 Based on guidelines Lockdown stages released on 17 May Industries unrestricted 1.0 2.0 3.0 4.0 (across all lockdowns) Industry 25 Mar 20 Apr 4 May 18 May Media ~8.9M 188 Education offline 1 1 Energy & utilities Confirmed cases globally Countries with cases Travel & tourism1 Oil & gas Public transportation2 Financials Fashion, luxury & other UK retail Insurance Russia Other services 0-3 days France Italy Education (online) 2 Spain USA China Japan Auto and components Iran Consumer staples South 3-6 days India Korea Building materials Food/drug retail

6-14 days Construction/infra Pharmaceuticals Consumer durables & Health services 14-30 days Brazil discretionary Forest products Telecom

As of 05 June, 2020 June, 05 of As >30 days Days of doubling cases doubling of Days Chemicals Agriculture

Machinery ~0.42M ~0.23M ~0.17M IT services Goods transportation & logistics Total no. of cases1 Recovered1 Active1 IT hardware Metals & mining

As of 22 June 2020 Packaging

Partially Fully restricted Unrestricted restricted Turn the Tide Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards and hence imperfect measures Unlock the new normal 1. . [NDTV Corona Virus - Live Statistics Data - accessed on 22nd June, 2020] 2. [BCG Analysis - No. of doubling days based on 7 day CAGR, Source: John Hopkins CSSE data] 3. [Ministry of Home Affairs (MHA) - Do not apply for containment zones, States and Union Territories may prohibit certain activities , BCG Analysis] The pandemic has impacted the socio-economic fabric of India Rapid acceleration of E-commerce adoption expected with consumers avoiding stepping out to shop

The pandemic has created a never-before Social distancing and structural Uncertainty around income and Consumer priorities being focus on health & safety interventions will drive faster recovery weakened demand potential in near re-calibrated; certain behavior changes term will stick long term

HEALTH & SAFETY PUBLIC POLICY ECONOMICAL SOCIAL

1 4 7 11 Public Health Income Uncertainty Consumer Sentiment • 11 Measures 60% of total household expenditure in ~140Mn+ online shoppers in India ; COVID-19 Cases hotspots; 45% of consumption in Consumers showing higher propensity to 1 Social distancing enforced via nation- 0.42M+ total cases in India 6 wide lockdown hotspots non-essential spend on online channel even for • 198M workforce employed in hotspot traditionally offline categories12 7 5 districts 12 2 Media, Smartphone Usage Industry 8 8 16% increase in smartphone screen Web Trends Guidelines Inflation / Price Indicators time (May vs Pre-COVID)13 ~120% spike in online searches on health Major categories for E-commerce (eg. • 70 bps drop in CPI Globally, ~3Bn average MAUs across & immunity in India post COVID2 Consumer electronics, durables, • 130 bps drop in WPI apparel and CPG) in unrestricted Facebook, WhatsApp, Instagram & 14 category as per latest government 9 Messenger Trade / Logistics Indicators9: 3 guidelines4 13 • 35% decline in exports and Mobility 29% decline in imports 40%+ reduction in number of visits to Demand of health products 6 • 14% decline in retail freight traffic public places due to lockdown and social 49% consumers intend to buy more Monetary distancing16 vitamins, herbs and supplements in the Relief Measures 10 14 3 coming days ~$13Bn infusion by monetary relief Market Sentiment Indicators10: Web Traffic trends measures by RBI5 20% decline in Nifty index since 1st Feb Internet peak traffic saw 40% rise in March in India15

Source: 1. [NDTV Corona Virus - Live Statistics Data - accessed on 22nd June, 2020] ; 2. [Online Search Trends (India)] 3. [BCG COVID-19 Consumer Sentiment Survey, April 30- May 03 (N = 1,327)] 4. [Ministry of Home Affairs (MHA), Govt. of India; Do not apply for containment zones, States and Union Territories may prohibit certain activities] 5. [RBI Notification – 17th April] 6. [BCG Analysis, Source: Nielsen-Indicus database 2017-18, Hotspot list as of 15th April (MoHFW), data compiled in 2017-18 , Press Search] 7. [BCG Analysis, Source: Hotspot list as of 15th April (MoHFW), PLFS workforce survey 2017-18, Census 2011-12 district workforce report] 8. [CPI (MOSPI), WPI (Office of economic advisor) – Change comparison Feb 20 vs March 20] 9. [Import-Export movement (Ministry of Commerce & Trade), Railway Traffic (Ministry of Railways) – YoY decline in March'20] 10. [Bloomberg data - As of 23-April] 11. [Source: Forrester Report; Forecasted for 2019] 12. [Source: BCG COVID-19 Consumer Sentiment Survey 13. [BARC Nielsen Turn the Tide – TV + Smartphone consumption report during COVID, 7th May 2020] 14. [Facebook Q1 2020 Earnings Release/ Call Transcript – 2.6Bn users just on Facebook] 15. Press Search [News18] [Internet Traffic in India Sees 40% Spike in March Due to COVID-19 Unlock the new normal Lockdown: ACT Fibernet] 16. [Source: COVID-19 Community Mobility Report – India – Apr 17, 2020] ‘Social distancing’ has been the key to fight disease globally and in India; making it the new way of living

Social distancing advocated as key measure to India is actively following social distancing control COVID spread guidelines

India has observed a stark drop in number of visits CDC across public places

RETAIL & RECREATION WORKPLACE Johns Hopkins Reduction in number Reduction in number University ~85%2 of visits compared to ~65%2 of visits compared to baseline baseline

South Korea South Korea keeps social distancing post COVID-19 -qz.com This is reflecting in consumers preferring digital for buying and payments to avoid disease vectors like cash and POS3 Hong Kong Hong Kong extends social distancing measures as cases drop -Bloomberg

Consumers expect to Consumers increased Globally strict measures followed to ensure social distancing ~40- ~45- 50%4 increase E-com spend 50%4 usage of digital payment Up to 15 April 2020 in next six months options during lockdown Closed public Closed 10+ transportation1 19+ workplaces1

Countries Countries Turn the Tide 1. [Oxford COVID-19 Government Response Tracker] 2. [COVID-19 Community Mobility Report (April 17, 2020) - The baseline is the median value, for the corresponding day of the week, during the 5-week period Jan 3–Feb 6, 2020]; 3. Press Search 4. CCI Unlock the new normal Consumer sentiment survey Even in challenging times, historically there are organizations that have found opportunities to grow

18% of Indian companies1 improved both growth & margin during Globally, companies have weathered historical downturns and the 2008-09 Global financial downturn, while 37% declined in both2 emerged victorious by recognizing opportunities3

Increasing sales growth ALIBABA GROUP

Launched C2C marketplace 17 years of A Taobao in 2003, driven by continuous growth consumer behavior changes due 21% 18% to SARS; propelling Taobao on a path of 17 years of continuous ~$430 Bn GMV (Taobao) growth Shrinking Expanding EBIT margin EBIT margin B 3-5 X Growth in listing of new B2B businesses on 37% 24% 3-5 Alibaba in 2003 compared to pre-SARS rate times Overall, Alibaba grew from 400 employees in 2003 to 100,000 in 2020

Falling sales growth Turn the Tide 1. [Indian public companies with Market Cap > $10M, excluding Banks, Insurance, Asset Management companies] 2. [BCG Analysis: Based on revenue growth & EBIT Margin growth (from FY'09 to FY'12) compared to three-year pre-downturn baseline (from Unlock the new normal FY'06 to FY'09); Source: S&P Capital IQ Financial Statements] 3. [Press release, expert interviews; BCG analysis, Statista] As we move towards recovery, near term potential exists in pockets; need to look at the de-averaged picture

25 states have less than 20% active cases1 Data as of 09 June Very High : >=10% of pan India cases 80% cases High : >=3%, <10% of pan India cases Ladakh (50) Med : <3% of pan India Jammu and Kashmir (2916) cases Himachal Pradesh (189) Punjab (482) No cases Companies should strategically prioritize re- Chandigarh (39) Uttarakhand (684) Haryana Arunachal Pradesh (50) opening and scaling up business as lockdown Delhi (17712) (2681) Meghalaya (22) Uttar Sikkim (7) starts easing across regions Rajasthan Pradesh Assam (2107) (2513) (4320) Bihar Nagaland (115) (2672) Manipur (214) Jharkhand Tripura Madhya Pradesh (730) (646) (2688) Mizoram (41) Chhattisgarh Gujarat(5309) (848) Odisha Dadar Nagar Haveli (20) Maharashtra (992) West Bengal (44384) (4743)

Telangana (1803)

Goa (263) Andhra Pradesh (2031) Potential to target specific Karnataka (3177) micro-markets further along recovery to Puducherry (75) 'normal' Tamil Nadu (15416) Kerala(1175) Andaman and Nicobar Islands (0) Turn the Tide Unlock the new normal 1. [BCG Analysis, Source: Ministry of Health & Family Welfare (MoHFW) website; Press reports] Spending sentiment translating differently across categories Essential categories have more positive outlook; mixed sentiment for electronics and discretionary spends

Right strategic actions needed to win disproportionate share Marketers will need to identify pockets of opportunities

“Growing” Categories Wave 1 Wave 2 Wave 3 'Shrinking' Categories Wave 1 Wave 2 Wave 3 Categories with net increase in spends 23-26th Mar 17-20th Apr 30 Apr-03rd May Categories with net decrease in spends 23-26th Mar 17-20th Apr 30 Apr-03rd May

Fresh foods Mobile electronics

Staples Electronics Non-mobile consumer electronics Luxury brands/products Household care products Daily essentials Cosmetics, makeup, perfume Personal care products Apparel/fashion Utilities (electricity, water) Packaged food & beverage Discretionary Mobile services spends Tobacco & smoking supplies Home wifi connection Alcohol Food delivery Paid OTT subscription At-home Sports equipment & clothing entertainment DTH services Home furnishings and décor Toys & games Home Home construction/renovations Savings Vacation/leisure travel Saving/ Investments Insurance Business travel Travel Preventive diagnostics/test Public transport Spas, theme parks, concerts Vitamins, herbs, supplements Restaurants Medical procedures OOH Health Entertainment Movies at cinema hall First-aid Scooters/bikes Cars Education Education Auto Consumer sentiment Positive Neutral Negative

Note: Question text: “How do you expect your spend to change in the next 6 months across the following areas?” Categories with Top 2 Box > (5% more than average) classified as winning categories. Categories with Bottom 2 Box > (5% more than average) Turn the Tide classified as losing categories. Categories neutral across waves: Baby/children's food, Non prescription medications, Prescription medicines, House rent, Home purchase & Home loans. Unlock the new normal Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively) Pre-COVID, E-commerce in India was small but growing fast

E-Commerce in India was still small but Opportunity for increased penetration across all categories growing fast among major economies

Value ($B) % of online sales Overall online +33% Segment-wise split of online sales (In $ Bn – 2019) w.r.t total retail 31 sales penetration 24 sales (2019) 14 18 10 Consumer Electronics 14 75% by 30% GMV Apparel & Footwear 7 6% 2015 2016 2017 2018 2019 CPG - Food 2 0.3% (CAGR 15-19(E), %) 4% 27% CPG - Personal Care 1 7% 25% 33% CAGR; higher than other Appliances 2 9% Significant opportunity for major markets Media 2 26% growth across # of online buyers (Mn) Homeware 1 4% categories to meet 143 global benchmarks in Driven by 2.6X Other 2 2% growth in number of online penetration online buyers in India 54 Total 31 4% (2015-2019) 2015 2019

Source: BCG Analysis; Online Retail Forecast Forrester report (Includes the purchase of merchandised goods and services. Does not include travel and hotel categories. Excludes other services, digital media spend and other financial transactions. Online retail Turn the Tide sales in China and India include both business-to-consumer (B2C) and consumer-to-consumer (C2C) sales; 2019 values as per Forrester forecast; Consumer Electronics includes Computer hardware and software, Consumer electronics and smartphones; Food Unlock the new normal refers to Grocery; COVID-19 has accelerated E-commerce adoption in India by 2-3 years

India now expected to have 300 Mn+ online shoppers by 2023

Estimated number of online shoppers in India (In Mn) – Post-COVID vs Pre-COVID Pre-COVID, India was expected to have 300 Mn online shoppers by 2025; 140-150 Mn online shoppers In the aftermath of the pandemic, number of online shoppers likely to in India today reach 300 Mn by 2023 375-400 400 280-320 300-320 300 240-260

200 140-150

100 50-60

0 2015 2019 2023 (F) 2025 (F)

Pre-COVID Post-COVID

Source: Forrester report, Expert interviews and BCG analysis Turn the Tide Unlock the new normal THIS PANDEMIC HAS DEEPLY IMPACTED THE MIX OF BOTH ONLINE BUYERS AND CATEGORIES BOUGHT ONLINE

Turn the Tide Unlock the new normal Different consumer spend pools have opened up for online to tap

# of Estimated How the pandemic has impacted the spend pools consumers in spend in $Bn Mn (2019)1 (2019)2 • Pool will increase with new adopters and wallet Online spend of deepening ~$30 Bn Online spend pool will grow online buyers • Higher need for friction-less experiences with growing digital maturity

140-150 Mn

• Online share of wallet will grow as propensity to Offline spend spend online for traditionally offline categories of online $75-100 Bn increases buyers • Need for contact-less convenience will drive

Consumers with any spend online spend any with Consumers growth Increase in online spend Consumers will increase 40-50% their online spend Offline spend • Forced adoption of online shopping driven by (includes both new and lockdown; early trends show high likelihood to of digitally existing online buyers)3 400-420 Mn $275 Bn+ continue savvy but non- spend • Overall growth in digital maturity will create

online buyers comfort for online shopping

but no online no but Internet users users Internet

1. On a base of 540-570M Internet users 2. On a total base of $852bn in India (2019) ; Source: Forrester Report, BCG Analysis; Excludes travel and hotel categories, services, digital media spend and other financial transactions; 3. Question text: “In the next 6 Turn the Tide months, how do you expect your online spend for the following types of products to change?”; Source: BCG Analysis - BCG COVID-19 Consumer Sentiment Survey (India), April 30-May 03 2020, N=1327 Unlock the new normal 40-50% consumers expect to increase online spend, even for traditionally offline categories

% consumers expected to increase/ retain online spend in next six months

31% 25% 38% 29% 32% 28% 31% 27% 34% 31%

55% 60% 52% 51% 46% 47% 51% 39% 43% 44%

Mobile phones Consumer durables Apparel/ fashion Home appliances Household Personal care Cosmetics, Packaged food Fresh foods Staples care products products makeup, perfume & beverages

High online Historically Low online propensity moderately online propensity

Same More than usual

Note: Question text: “In the next 6 months, how do you expect your online spend for the following types of products to change?” Turn the Tide Source: BCG Analysis - BCG COVID-19 Consumer Sentiment Survey (India), April 30-May 03 2020, N=1327 Unlock the new normal High willingness to increase online spend observed across all demographic segments

% of consumers looking to increase / decrease / retain online spends in the next 6 months – Demographic profile1 Similar trends across both SEC A and SEC B 45-50% consumers across all age groups are planning Similar trends in increased online consumers with positive / neutral sentiment to increase spends on online channel spending propensity observed for both towards online spends metro and non-metro cities

For select categories like For select categories like cosmetics & consumer 35 mobile, apparel and food 45 durables older consumers affluent consumers have 50 48 52 48 (26+) have a more positive 49 higher affinity to spend spending outlook

44 36 29 31 31 33 30

20 21 18 21 19 19 21

SEC A SEC B 18-25 yrs 26-35 yrs 36-45 yrs Metro Non-Metro

% may increase spends on online channel (6M) % may spend the same on online channel (6M) % may decrease total spends on online channel (6M)

Note: Question text: “In the next six months, how do you expect your online spend on the category X to change as compared to before lockdown? Turn the Tide Source: BCG Analysis - BCG COVID-19 Consumer Sentiment Survey (India), April 30-May 03 2020, N=1327 Unlock the new normal Surge in new adoption across categories; new online buyers likely to continue 20-30% new online buyers across most categories; 80-90% likely to continue

New online buyers as a % of total online and offline buyers (Post-COVID)1 Key drivers for new adoption

28% 28% 26% 24% 24% 23% 20% 21% 18% With higher need for social distancing, 11% consumers preferring contact-less purchase

Mobile Consumer Apparel/ Home Household Personal Cosmetics, Packaged Fresh foods Staples phones durables fashion appliances care care makeup, food & products products perfume beverages

Non-availability of other channels during % of new online buyers likely to lockdown for certain categories continue post 100% 91% 90% 88% 82% 83% 86% 78% 82% 80% lockdown2

1. Q . Which statement best describes your behavior about ? 2. Q. You mentioned that you have started online purchase of since the Lockdown. How likely are you to continue Turn the Tide purchasing” Source: BCG Analysis - BCG COVID-19 Consumer Sentiment Survey (India), April 30-May 03 2020, N=1327 Unlock the new normal As traditionally offline spends move online, higher need to resolve erstwhile barriers with new models

Trends from China indicate consumers will New online shoppers across categories will expect their traditional barriers to be be eager to try new online models solved even in their online journeys incorporating the positives of offline

Top reasons for not buying select category online Illustrative % of consumers planning to spend more / same on 5 Mobile1 Durables2 emerging E-commerce models 35+ yrs, female, non-metro 35+ yrs, male, non-metro % urban consumers % urban consumers Traditional Immediate need for product 26% Easier service/ repair online 34% 45% 39% E-commerce Difficulty in returns 17% Difficulty in returns 27% Easier service/ repair online 13% Immediate need for product 20% O2O 43% 32% Pre-COVID Pre-COVID Social group 40% 40% Fashion3 Food & Grocery4 purchase <35 yrs, male, non-metro % urban consumers <35 yrs, male, non-metro % urban consumers Video purchase 37% 40% Lack of touch and feel 40% Need to check product quality 35% Livestreamed Better prices offline 25% Immediate need for product 28% selling 35% 41%

Immediate need for product 11% Easier return & other benefits 15% Conversational 32% 39% Pre-COVID Pre-COVID Commerce 1. Q. Could you please tell me topmost reason why you chose to buy mobile offline?, Source: CCI Digital Deep Dive 2016 (N=450), BCG CCI Digital Influence 2017 Study (N=18,000), Nielsen 2017 survey (N=1845); 2. Q. Could you please tell me top 3 reasons why you chose to buy large appliances offline; Only top 1 rank considered for analysis; Source: CCI Digital Deep Dive 2016 – Among digitally influenced large appliance buyers (N=560), BCG CCI Digital Influence 2017 Study (N=18,000), Nielsen 2017 survey (N=1845) 3. Q . Could you please tell me top 3 reasons why didn’t you buy this category online? Only top rank considered for analysis; Source: CCI Digital deep dive 2016 – Among digitally influenced apparel shoppers (N=501), BCG CCI Digital Influence 2017 Study (N=18,000), Nielsen 2017 survey (N=1845) ;4. Q. Turn the Tide Could you please tell me top 3 reasons why you chose to these categories offline; Only top 1 rank considered for analysis; Source: CCI Digital deep dive 2016 (N=502), BCG CCI Digital Influence 2017 Study More SameUnlock the new normal (N=18,000), Nielsen 2017 survey (N=1845); 5. Source: BCG CCI COVID-19 Consumer Sentiment Survey 2020, April 23-26 and May 8-10, 2020 (N = 2,779 and N = 2,884 respectively, unweighted, representative within ±3% of Chinese census). To win a share of this growing opportunity, imperative to understand the most fundamental change from COVID: Change in consumer behavior

Turn the Tide Copyright by Boston© 2020 Consulting Group. All rights reserved. Unlock the new normal The pandemic will create different types of changes in consumer behavior – some more long lasting than others

REVERSAL OF ACCELERATION OF EXISTING NEW PAST TRENDS TRENDS HABITS

Wild cards; likely to be High potential Stickiness of change is temporary surges permanent shifts in behavior yet to be determined

These are complete reversal of how consumers Consumer behavior was already moving towards Entirely new habits developed during the pandemic were behaving in the past these trends and while social distancing

These changes have mostly risen out of a constraint or With the pandemic, the trends have gained Consumers who gain positive reinforcement out of the fear vs. convenience or choice momentum and accelerated habits may retain them

These trends will likely last in line with recovery Positive reinforcement is essential for consumers to Ecosystem facilitating and feeding these changes can period adopt them in the long term make it last longer

Turn the Tide Unlock the new normal New trends of consumer behavior emerge across categories This will deeply impact purchase pathways in the new normal

REVERSAL OF PAST ACCELERATION OF NEW TRENDS EXISTING TRENDS HABITS

5 9 1 Embracing digital services & Bringing the Remote way of living Outside Inside experiences Social 6 10 Accelerated adoption of e- 'D'o 'I't 'Y'ourself Distancing commerce & O2O

7 11 Superior hygiene & clean Strive for Health & Wellness living: a new norm Health & 2 8 Hygiene Trust in brand Rise of 'Smart shopper' above all else 3 Trading down & bargain hunting Income Uncertainty 4 Shopping for Utility

Wild cards: likely to be temporary surges in line High potential permanent shifts: linked to Stickiness of change is yet to be determined with recovery period positive reinforcement THE PURCHASE PATHWAY FOR CONSUMERS IS UNDERGOING FUNDAMENTAL CHANGES ACROSS CATEGORIES

UNDERSTANDING THIS WILL BE KEY TO TAP EMERGING OPPORTUNITIES

Turn the Tide Unlock the new normal Mobile In Summary: T urn urn the Tide Unlockthe new normal

Copyright © 2020 by Boston Consulting Group. All rights reserved. 8 consumer trends will have a higher impact on the Mobile category

REVERSAL OF PAST ACCELERATION OF NEW TRENDS EXISTING TRENDS HABITS

1 5 9 Bringing the Embracing digital services & Remote way of living Outside Inside experiences Social 6 16% higher time spent on Accelerated adoption of e- 94% use mobile phones while watching Distancing smartphones vs pre-COVID5 commerce & O2O TV7

55% 70% of those with a positive spending outlook intend to increase spends on on mobiles likely to stick with the brand in 70%4 urban consumers for mobile 3 mobile phones in online channel mind in the near term 2 expected to be digitally influenced Health & in the next 6 months 2 8 Hygiene Trust in brand Rise of 'Smart shopper' above all else 3 55%6 smartphone buyers used online Trading down & 1 in 2 of those who plan to increase spends 1 research pre-COVID; this is expected to bargain hunting on mobile are expecting discounts/offers increase Income 4 Uncertainty 5-10% increase in salience of functional Shopping for Utility purchase triggers4 for mobiles

Wild cards: likely to be temporary surges in line High potential permanent shifts: linked to Stickiness of change is yet to be determined with recovery period positive reinforcement

1. [Q. “Please state the reason to spend more/ less in near future?” Source: BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020, N=1,327] 2. [Q. “In the next 6 months, how do you expect your online spend for the following types of products to change?” Turn the Tide Source: BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020, N=1,327] 3. [Q. “In the next 6 months, how do you expect the choice of your brand to change" (for those increasing spends) Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, Unlock the new normal N=2106} 4. [Expert interview and BCG analysis] 5. [BARC Nielsen – TV + Smartphone consumption report during COVID, 7th May 2020] 6. [Percentage of the smartphone users; BCG CCI Mobile consumer study, N=2000] | 7. [GWI, All Internet Users 18-45, Coronavirus Research | April 2020 Multi-market research wave 2 and Core Research Respondents on COVID-19 from Q1-Q4 2019] CONSUMER BEHAVIOR CHANGES IN MOBILE PATH TO PURCHASE

With higher value consciousness, functional triggers to become more 1 5-10% increase expected in salience of functional purchase triggers for important mobiles1

2 Higher average replacement time in near-medium term 8-10% increase in replacement time in the near-medium term for mobiles1

1 3 Salience of digital influence for mobile will rise even more ~70% urban consumers for mobile expected to be digitally influenced post COVID; up from 55-60%2 pre-COVID

4 With social distancing, importance of online research to increase 55% smartphone users researched online pre-COVID3; expected to increase

With a value seeking mindset, importance of pricing as a choice 4 5 driver to go up 40% of consumers planning to decrease spends will buy a cheaper variant

DISCOVERY & DISCOVERY With changing use cases, consumers will be more feature ~23% consumers chose features in top 3 choice drivers pre-COVID;

CONSIDERATION 6 conscious expected to increase5

Certain features related to in-demand use cases may become 7 ~16% increase in screen time spent on video streaming post- more important COVID; leading to increasing need for higher video stability etc.6

Uncertainties due to pandemic may lead to some 70% consumers with positive spending outlook likely to stick with 8 consumers experimenting less brand choice already in mind 7 Online share for mobile phones (in value terms) likely to reach 9 Affinity for online will accelerate even more 45% in the next 2 years1; up from 38% pre-COVID9

PURCHASE PURCHASE Consumers will expect positives of offline along with safety Lack of product experience before buying has been one of 10 and convenience of contact-less purchase the key barriers to online purchase 8

With social distancing, consumers will want to Higher need for at-home or virtual post limit store visits for after-sales service

11 sales service POST POST 1. [Expert interview and BCG analysis]; 2. [BCG CCI Digital influence Study 2017 , N=18,000, BCG CCI Mobile consumer study, N=2000 and BCG analysis] ; Data for urban consumers shown 3. [Percentage of Smartphone users; Source BCG CCI Mobile consumer study and BCG Turn the Tide analysis, N=2000]; 4. [Q. “In the next 6 months, how do you expect the choice of your brand to change” (for those decreasing expenses) Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, N=2106]; Data shown for urban consumers; 5. [Considering average of PURCHASE Rank 1-3 responses. Q: “Thinking about your most recently purchased mobile phone, can you tell me the 3 most important factors which helped decide what product should be bought?" Source: CCI Survey , N=840]; 6. [BARC Nielsen – TV + Smartphone consumption report Unlock the new normal during COVID, 7th May 2020] 7. [Q. “In the next 6 months, how do you expect the choice of your brand to change" (for those increasing expenses); Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, N=2106 ] ; Data shown for urban consumers; 8. [Q: "List of statements read out for 4 channels and asked to choose which channels are applicable to each of the statement"; Source: CCI Survey, N=840] ; Data shown for urban consumers; 9. . [IDC India Mobile Phone Tracker ; % by value] In Summary: Apparel 7 consumer trends will have a higher impact on the Apparel category

REVERSAL OF PAST ACCELERATION OF NEW TRENDS EXISTING TRENDS HABITS

3 6 55-60% urban consumers Embracing digital services & expected to be digitally Remote way of living influenced4 experiences

4 79% consumers are unwilling to go out of Social 40% of consumers are Accelerated adoption of e- house, except work5; higher need for casual planning to increase online Distancing / comfort in wardrobe vs social occasion spend on apparel7 commerce & O2O clothing 5 7 Superior hygiene & clean 32% consumers are planning to Strive for Health & Wellness trade down in apparel1 living: a new norm Health & 40% of consumers planning to 1.4x rise in time spent on Consumer want retailers to focus on increase spend will expect fitness apps8; increase in Hygiene high standards of store hygiene post the discounts/ promotions during demand for activewear/ 2 pandemic (57% globally)6 apparel shoopping athleisure 1 Trading down & bargain hunting Purchase triggers expected to become Income more "functional" vs. occasion led ; 2 15% consumers shopped due to Uncertainty functional reasons pre-COVID3; Shopping for Utility expected to rise significantly

Wild cards: likely to be temporary surges in line High potential permanent shifts: linked to Stickiness of change is yet to be determined with recovery period positive reinforcement

1.. [BCG COVID-19 Consumer Sentiment Survey, Question: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively)), 2.[BCG COVID-19 Consumer Sentiment Survey, Question Text: “Please state the reason to spend more/ less in near future?” , Source: BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. [CCI Survey and BCG analysis, Question Text: Occasion/reason for your last purchase in given apparel subcategory?, N=1218],4. Estimation for 2021 from expert interviews and BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year),5. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus? Combined Strongly agree and somewhat agree", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 6. BCG COVID-19 Consumer Sentiment Survey, April 17–20, 2020 (N = 5,729 across Turn the Tide China, Germany, Italy, UK, and US; unweighted), 7. [BCG COVID-19 Consumer Sentiment Survey, Question Text:" In the next one month, how do you expect your online spend Apparel/ fashion (e.g., clothing, handbags, footwear) to change?”; April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30- Unlock the new normal May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively)), 8.[Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27] CONSUMER BEHAVIOR CHANGES IN APPAREL PATH TO PURCHASE 41% consumers shopped apparel due to celebratory reasons pre-COVID1; Shopping triggers will be more functional as opposed to being led 1 by occasions likely to decrease with 57% consumers having stopped or reduced going out to meet friends10

Some consumers will seek attractive pricing or may trade down in 2 2 choices 40% of consumers planning to increase spend will look for discounts

Casualization of wardrobe and higher demand for comfort with a 3 With 79% consumers unwilling to go out of house except work, more “stay-at-home” lifestyle casual wear expected to become a larger part of wardrobe3

Given increasing focus on health and wellness, there will be Consumers are becoming increasingly health conscious; 1.4x increase DISCOVERY & DISCOVERY 4 4 CONSIDERATION higher demand for fitness wear in time spent on fitness apps

With more time online, digital influence will rise for ~55-60% urban consumers for apparel expected to be digitally 5 apparel shoppers influenced post the COVID; up from 45-50% pre-COVID5

Consumers will expect higher standards of hygiene as 6 57% consumers globally want retailers to focus on high they return back to stores standards of store hygiene, once the lockdown is over6

Surge expected in preference for online apparel 7 40% consumers are planning to increase shopping online spend on apparel7

Consumers will need feel/fit/social experience 40% consumers cited lack of touch and PURCHASE PURCHASE 8 along with a new need for contact-less feel as a key barrier to online apparel convenience in shopping shopping, pre-COVID8

Core need for peer recommendations in 9 apparel shopping may be fulfilled digitally, 1 in 2 consumers rely on peer reviews and recommendations9 POST POST with growing virtual connect

PURCHASE 1. [CCI Survey and BCG analysis, Question Text: Occasion/reason for your last purchase in given apparel subcategory?, N=1218]; 2. Question Text: “Please state the reason to spend more/ less in near future?” , Source: BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020; 3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus? Combined Strongly agree and somewhat agree", April 30-May 03 2020; 4. [Nielsen, Nielsen TV and Smartphone Turn the Tide report, Week of March 30 vs Week of April 27]; 5. Estimation for 2021 from expert interviews and BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year); 6. BCG COVID-19 Consumer Sentiment Survey, April 17–20, 2020 (N = 5,729 across China, Germany, Italy, UK, Unlock the new normal and US; unweighted); 7. [BCG COVID-19 Consumer Sentiment Survey, Question text: "Which statement best describes your usage behavior since the Lockdown?] April 30-May 03 2020; 8. BCG-Facebook Fashion forward 2020 report; 9. [CCI Survey and BCG analysis, Question Text: Which of the following sources of information influence your decision the most for purchase of apparel?, Source: CCI Survey and BCG analysis]; 10. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus?", "Which statement best describes your behavior since the Lockdown?", Source: BCG COVID-19 Consumer Sentiment Survey, May 18-May 23 2020 Packaged Food Staples Fresh Food CPG In Summary: - Food

Copyright © 2020 by Boston Consulting Group. All rights reserved. 7 consumer trends will have a higher impact on the CPG (Food) category

52% consumers have increased use of social media; REVERSAL OF PAST ACCELERATION OF NEW more product discovery on TRENDS EXISTING TRENDS HABITS social media e.g. recipe videos, food reviews6 1 4 6 Bringing the Accelerated adoption of e- Remote way of living Outside Inside commerce & O2O

Social 80% consumers who have purchased food 7 2.7x rise in viewership of cooking recipes related sub -categories online during the owing to home cooking1 'D'o 'I't 'Y'ourself Distancing lockdown are willing to continue2

100% spike in online research 2 5 Trust in brand of "how to" trends7 above all else Strive for Health & Wellness Health & 65%+ consumers are planning to stick to 49% consumers to increase spend on Hygiene the choice of the same brand3 Health & Wellness products5

3 Trading down & bargain hunting

Income 28% consumers are planning to trade 4 Uncertainty down

Fresh Food

Staples Wild cards: likely to be temporary surges in line High potential permanent shifts: linked to Stickiness of change is yet to be determined Packaged Food with recovery period positive reinforcement

1. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27]; 2. [BCG COVID-19 Consumer Sentiment Survey, categories considered: Fresh Food, Packaged F&, Makeup, Staples, Personal Care, Home Care & Baby Care, Question text: “ In the next 6 months, how do you expect your online spend for the following types of products to change?”, April 30-May 03 2020; 3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "In the next one month (CPG) how do you expect the choice of your brands to change?”; April 30-May 03 2020 ; 4. BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020; 5. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How do you expect your spend to change in the next 6 months across the following areas?”; April 30-May 03 2020; 6. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020; 7. [Online Search Trends (India), 2nd week of Feb to 4th week of April] CONSUMER BEHAVIOR CHANGES IN CPG (FOOD) PATH TO PURCHASE

Consumers will trade up in staples and selectively trade up 31% consumers planning to trade up across staples and packaged food; 1 /down in packaged food owing to a more value conscious, yet while 28% are planning to trade down in packaged food1 quality focused mindset

2 Changes in basket with a more at-home, do-it-yourself 2.7x rise in viewership of cooking recipes owing to home cooking2

lifestyle

DISCOVERY & DISCOVERY CONSIDERATION

Surge in demand for specific products/variants with an 3 49% consumers to increase spend on Health & increased focus on health, hygiene, and wellness Wellness products3

Consumers will look for buying avenues which provide 45+% consumers planning to increase 4 contact-less convenience while fulfilling their core needs online spend in the next 6 months; 40+%

of familiarity and immediacy increase in online buyers4 PURCHASE PURCHASE

Post purchase advocacy will 1 in 2 consumers relied on Word of 5 continue to be important; digital will Mouth for first online purchase in CPG pre-COVID; expected to be POST POST be a powerful medium

fulfilled digitally5 PURCHASE

1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020 ]; 2. 1. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27]; 3. [BCG COVID-19 Turn the Tide Consumer Sentiment Survey, Question Text: "How do you expect your spend to change in the next 6 months across the following areas?”; April 30-May 03 2020 ; 4. BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 ; 5. [CCI Survey and BCG analysis, Question Unlock the new normal Text: "Can you tell us the reasons of what made you buy food & grocery online the first time?", N= 6000 transactions] Cosmetics PersonalCare Home Care CPG In Summary: - Non - Food

Copyright © 2020 by Boston Consulting Group. All rights reserved. 8 consumer trends will have a higher impact on the CPG (Non-Food) category

52% consumers have increased REVERSAL OF PAST ACCELERATION OF NEW use of social media5; more product discovery on social TRENDS EXISTING TRENDS HABITS media e.g. beauty tips, hacks 1 4 6 Bringing the Accelerated adoption of e- Remote way of living Outside Inside commerce & O2O 7 Social 84% consumers who have purchased non 2.8x rise in time spent on food related sub -categories online during self help and personal grooming videos1 'D'o 'I't 'Y'ourself Distancing the lockdown are willing to continue2

2 100% spike in online research of "how Trust in brand to" trends6 above all else 8 Health & Superior hygiene & clean 88% consumers are planning to stick to the living: a new norm Hygiene choice of the same brand3

3 5 47% Indian household claim increased Trading down & home/toilet cleaning7 Rise of 'Smart shopper' bargain hunting 91% Indian households washing hands more often7 ~1.3x rise expected in share of digitally 29-33% consumers are planning to trade Income influenced urban consumers across non- down3 Uncertainty food categories4

Home Care

Personal Care Wild cards: likely to be temporary surges in line High potential permanent shifts: linked to Stickiness of change is yet to be determined Cosmetics with recovery period positive reinforcement

1. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27]; 2. 2. [BCG COVID-19 Consumer Sentiment Survey, categories considered: Fresh Food, Packaged F&, Makeup, Staples, Personal Care, Home Care & Baby Care, Question text: “ In the next 6 months, how do you expect your online spend for the following types of products to change?”, April 30-May 03 2020 ; 3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "In the next one month (CPG) how do you expect the choice of your brands to change?”; April 30-May 03 2020; 4 Estimation for 2021, Expert Interview, BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year) 5. . [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020; 6. [Online Search Trends (India), 2nd week of Feb to 4th week of April]; 7. . [Kantar, COVID-19 Barometer India Research Webinar, 3rd April] CONSUMER BEHAVIOR CHANGES IN CPG (NON-FOOD) PATH TO PURCHASE

Consumers will trade up in home care, trade down in cosmetics, and 24-29% consumers planning to trade up in homecare and personal 1 selectively trade up /down in personal care owing to a more value care; while 29-33% are planning to trade down in cosmetics and conscious, yet quality focused mindset personal care1

Surge in demand for specific products/variants with an increased focus 47% Indian households claim increased home/ toilet cleaning; 2 on health, hygiene, and wellness 91% Indian households washing hands more often2

Changes in basket with a more at-home, do-it-yourself lifestyle 2.8x increase in time spent on self help/personal care

DISCOVERY & DISCOVERY 3

videos3 CONSIDERATION

Salience of digital influence to rise for home care, personal ~1.3x rise expected in share of digitally influenced urban 4 care, and cosmetics; more consumers will increase online 4 research across these categories consumers across non-food categories

Consumers will look for buying avenues which 45+% consumers planning to increase 5 provide contact-less convenience while fulfilling online spend in the next 6 months; 30+%

their core needs of familiarity and immediacy increase in online buyers5 PURCHASE PURCHASE

Post purchase advocacy will continue to be 1 in 2 consumers relied on Word of Mouth 6 important; digital will be a powerful medium for first online purchase in CPG pre-COVID;

POST POST expected to be fulfilled digitally6 PURCHASE

1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020; 2. [Kantar, COVID-19 Barometer India Research Webinar, 3rd April],; 3.[Nielsen, Nielsen TV and Smartphone Turn the Tide report, Week of March 30 vs Week of April 27] ; 4. Estimation for 2021, Expert Interview, BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year); 5. BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 ; 6. . [BCG COVID-19 Consumer Sentiment Survey, Unlock the new normal Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020 FOR YOU TO WIN? WHATIT TAKE WILL ACROSS CATEGORIES NEW PATHWAYS E THE NEWNORMAL FOR - COMMERCESEE WILL T urn urn the Tide Unlockthe new normal

Copyright © 2020 by Boston Consulting Group. All rights reserved. The new pathway is changing and filled with opportunities

Portfolio & Messaging Value Focus Presence & Influence

STRENGTHEN BRAND - Digital proliferation and more functional, value POSITIONING Increase "top-of-the- PRE seeking choice drivers funnel" branding to TAP THE PURCHASE enhance brand equity HERE & NOW OPPORTUNITY: Scale up affordability ADJUST TO THE NEW initiatives and re- NORMAL OF appropriate ENGAGEMENT: Channel & Engagement promotional spends Significantly re- to aid rebound design digital Fulfilling core needs of assistance, experience, engagement with instant gratification and trust in a contact-less way CAPTURE THE your consumers leveraging social PURCHASE EXPANDING ONLINE WALLET: Tap media, influencers into increasing pool and loyalty programs of online buyers and leverage emerging E- commerce models to provide frictionless experience

POST POST Growing importance of brand advocacy and

PURCHASE personal touch

Turn the Tide Unlock the new normal Digital proliferation & choice drivers present opportunities

Superior Bringing the Strive for Embracing digital Trust in brand Shopping hygiene & clean Trading down and outside health & services and experiences above all else for utility living: a new Bargain Hunting inside wellness norm Scale-up partnerships for exclusive E-commerce launches Assurance for health and Strengthen 1 hygiene affordability initiatives Scale up partnerships for exclusive e- 5 7 commerce launches, including in traditionally offline heavy categories Adopt and highlight hygienic and contact-less initiatives across the Leverage social media for "top-of-the-funnel" branding value chain Scale-up partnerships 2 with Fintechs and banks to provide affordable Targeted campaigns to build brand equity (esp. for new online users) payment options (EMIs etc)

Ramp up personalization and re-marketing capabilities Review promotional spends to aid rebound 3 6 Focus on first party data capture to efficiently target and re-target • Re-appropriate discounts and promotions PURCHASE FUNNEL PURCHASE consumers with tailored nudges and offers - among essentials (reduce spends) and discretionary categories (increase spends)

PRE Localize offerings for changing demographics • Advance select sale events to revive consumer sentiment 4 • Accelerate creation of vernacular platforms to cater to new users in tier 2/3 cities • Localize static ads with dynamic language Turn the Tide optimization Medium Term Short Term Unlock the new normal Fulfilling core needs of assistance, experience, instant gratification and trust in a contact-less way

Accelerated adoption of E- Embracing digital services and Remote way of living DIY – Do It Yourself commerce and O2O experiences

Remove barriers to online sales to improve sales conversion 8

• Product experience / touch / feel / fit: Digital enablers like AR/VR, livestreaming, 3D Videos, detailed catalogues etc. • Assistance: Leverage conversational commerce, virtual query resolution, chatbots etc. (especially for new users) • Immediate gratification: Leverage O2O to develop hyperlocal capabilities with reduced delivery times • Trust in product / seller: Ensure and highlight high quality standards of vendors (especially for SMBs) • Shopping as a social event: Digital enablers for group purchase

Strengthen offline-online supply chain to meet spikes in consumers demand post lockdown

9 PURCHASE FUNNEL PURCHASE • Scale up O2O partnerships to offset supply chain challenges and provide more seamless journeys to customers

Turn the Tide Medium Term Short Term Unlock the new normal Build brand advocacy via personal connect

Embracing digital services Rise of “Smart Shopper” and experiences

Drive Value by repeat purchase 10

• Incentivize repeat purchases with loyalty program

• Incentivize social peer recommendation: online product reviews, ratings

PURCHASE FUNNEL PURCHASE

- POST

Turn the Tide Medium Term Short Term Unlock the new normal Brand Showcase (1/4) Pre-purchase

Scale up partnerships for exclusive E-commerce launches

Flipkart Amazon Range of Realme products OnePlus8 sales launch via Amazon including Realme smartphone and OnePlus website with Narzo 10A, Realme Watch and TV attractive offers launched via Flipkart and Realme Pre-launch buzz created with Website product previews2

Curated offers included like Zero- Xiaomi Mi 10 launched on Amazon cost EMI options1 and Xiaomi website3

Dabur launched Hand sanitizer range and Immunity Booster Tulsi Drops exclusively on Amazon and Flipkart to meet immediate surge in demand during lockdown4

Turn the Tide Source: Press Search and BCG Analysis; 1. [NDTV] [Realme Narzo 10A Goes on Sale Today at 12 Noon via Flipkart, Realme Website: Price and Specifications]; 2. [NDTV] [OnePlus 8 Pro to Go on Sale Today at 12 Noon via Amazon, OnePlus Site: Price in Unlock the new normal India, Specifications]; 3. [NDTV] [Mi 10 Goes on Sale in India via Amazon, Mi Store: Price in India, Offers, Specifications]; 4. [Economic Times] [BE Exclusive: Dabur launches Tulsi Drops after hand sanitizer] Brand Showcase (2/4) Pre-purchase

Leverage Social Media for Unlock influencer partnerships “top-of-the-funnel” campaigns

Myntra1

Launched Myntra Studio to provide users with Launched thought leadership campaign access to "original, exclusive, inspirational, using Facebook Live to help new parents entertaining and shoppable content at scale" through live online sessions with leading This aims to transform Myntra from a shopping pediatricians during COVID-19 as part of app to a “habit-app” the ‘World Immunization Week’2

296K 1.4Mn Collaborated with 350 fashion Total video views Reach influencers & celebrities to create content on look books, styling & product recommendation on own 82K 3 website and social media Highest video views Languages (English, for 1 live Hindi and Bangla) 1000 pieces of celebrity led content

Turn the Tide Unlock the new normal Source: Press Search, Social Media Search and BCG Analysis; 1 [Economic Times] [Myntra launches original fashion content to drive customer engagement amid the lockdown]; 2. Facebook Case Studies Brand Showcase (3/4) Pre-purchase

Rationalize assortment and SKU-mix to reflect changed needs and preferences of consumers

Flipkart Myntra Closely working with apparel brands to Showcasing range of work-from-home attire ensure higher availability of face masks where curated styles (including specific ones for conference calls) are available with focus Flipkart SmartBuy also launched hand on “comfort, while at work” sanitizers and surgical masks in April, to Myntra partnered with Wildcraft to sell fight the shortage protective face masks

Amazon1 Nykaa The Fashion and beauty E-commerce platform Amazon has now expanded its Pantry service has ventured into the delivery of essential to 128 cities delivering pulses, packaged products—bathing essentials, oral care food and cleaning products products, home needs, face masks, intimate hygiene essentials, moisturizers etc.

Leading E-com players are pushing larger packs to increase the basket size with price laddering (Up to 20% increase in average basket size) Turn the Tide Unlock the new normal Source: Press Search, Social Media Search and BCG Analysis; 1 [Economic Times] [Covid-19 impact: Curbs on e-commerce upset Amazon’s cart in India] Brand Showcase (4/4) Purchase

Strengthen online-offline network to meet spike in consumer demand post lockdown and to provide consumers a seamless experience

Flipkart1

Flipkart has partnered with Tata Consumer Products for essentials in an offline-online model Mondelez India under their brand ‘Cadbury Joy Deliveries’ enabled joyful moments with indulgent snacks Distributors of the Tata group companies will list themselves on Flipkart delivered to shopper’s doorstep while as marketplace sellers for essential products such as beverages (Tata Tea they are in the lockdown2 and Coffee) and foods (Tata Sampann spices, pulses, and nutria-mixes)

Flipkart has partnered with Spencer’s Retail 400+ for hyperlocal delivery of groceries and Purchases via conversion ads ran under 'Household Snacks' campaign essentials on Facebook & Instagram (Apri’20 –May’20 )

Turn the Tide Unlock the new normal Source: Press Search, Social Media Search and BCG Analysis; 1 [Business Standard] [Covid-19: Flipkart ties up with Tata Consumer to provide essentials] [LiveMint] [Flipkart, Spencer's to pilot hyperlocal grocery delivery]; 2. Facebook Case Studies DEEP DIVES

THESE CONSUMER BEHAVIOR CONSUMER TRENDS HAVE MOBILE APPAREL PACKAGED VARIED IMPACT ACROSS GOODS CATEGORIES

TOP 3 CATEGORIES – ACCOUNTING FOR 65% OF GMV IN INDIA (2019)

Turn the Tide Unlock the new normal Deep - dive: Mobile T urn urn the Tide Unlockthe new normal

Copyright © 2020 by Boston Consulting Group. All rights reserved. Consumer Behavior Change in P2P: Pre-Purchase

DISCOVERY

1 With higher value consciousness, functional triggers to 3 Salience of digital influence for mobile will rise even more become more important 1 % mobile consumers with pure replacement as purchase trigger to go up by 5- 2 10%2 … ~70% urban consumers for mobiles expected to be digitally influenced 60% 65-70% e.g., "Screen is not clear" e.g., "Phone is slow" Pre-COVID, 55-60%4 urban mobile consumers were digitally influenced (used online to discover or research or compare products) Pre-COVID Post-COVID ..while Shopping for non-functional triggers1 likely to reduce 55-60% 70% e.g., "Bored with phone" 40% 30-35% e.g., "I Like the new model" Pre-COVID Post-COVID Pre-COVID Post-COVID

2 Higher average replacement time in near-medium term

3 2.4 Yrs 8-10%2 increase in near-medium term +8-10% for mobile phones Pre-COVID Post-COVID

Acceleration of EMBRACING DIGITAL Reversal of past trends, SHOPPING existing trends, likely SERVICES & likely to be temporary FOR UTILITY to last longer term EXPERIENCES Turn the Tide Unlock the new normal 1. [Q: Best description of the need for purchase of your current mobile; Source: CCI Survey and BCG analysis, N=840] 2. [Expert interview and BCG analysis] 3. [Q. “Frequency of purchasing mobiles over last 5 years” Source: CCI Survey and BCG analysis, N=840] 4. [BCG CCI Digital influence Study 2017 , N=18,000, BCG CCI Mobile consumer study, N=2000 and BCG analysis] ; Data for urban consumers shown Consumer Behavior Change in P2P: Pre-Purchase

DISCOVERY CONSIDERATION

4 With social distancing, importance of online research to 5 With a value seeking mindset, importance of pricing as a increase choice driver to go up

Likely to • Both salience and maturity of online 25% Salience of price-conscious consumers may increase 55% increase research to increase % respondents with "Price" in top 3 choice driver for mobiles (pre-COVID)2 • More price, feature, performance % smartphone users using comparisons expected online research (pre-COVID)1 Consumers may trade down in their choice of purchase/look for offers and deals 53% Likely to decrease 59% 40% • Retailer influence may go down as % smartphone users using consumers look for more contact- less shopping Of those looking to increase Of those looking to decrease retailer recommendations spends on mobiles are looking spends on mobiles will buy 1 (pre-COVID) for deals3 cheaper variant4

% respondents (post-COVID)

Acceleration of RISE OF 'SMART Reversal of past TRADING DOWN existing trends, likely SHOPPER' trends, likely to be AND BARGAIN to last longer term temporary HUNTING

1.. [Percentage of Smartphone users; Source BCG CCI Mobile consumer study and BCG analysis, N=2000] 2. [Considering average of Rank 1-3 responses. Q: “Thinking about your most recently purchased mobile phone, can you tell me the 3 most important Turn the Tide factors which helped decide what product should be bought?" Source: BCG CCI Survey and BCG analysis, N=840] 3. [Q. “Please state the reason to spend more/ less in near future?” (for those increasing expenses) Source: BCG COVID-19 Consumer Sentiment Unlock the new normal Survey April 30-May 03 2020, N=1,327] 4. [Q. “In the next 6 months, how do you expect the choice of your brand to change” (for those decreasing expenses) Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, N=2106]; Data shown for urban consumers Consumer Behavior Change in P2P: Pre-Purchase

CONSIDERATION

6 With changing use cases, consumers will be more feature conscious 8 Uncertainties due to pandemic may lead to some consumers experimenting less

23% Salience of feature-conscious consumers may increase 58% Traditionally, mobile consumers have not been brand loyal

% respondents with "Features" in top 3 choice driver for mobiles (pre-COVID)1 % pre-COVID Consumers who switched brands3

7 Certain features may become more important Post-COVID, 70% Consumers with a positive spending outlook for mobiles 4 Post-COVID increase is screen-time2 spent on likely to stick with brand choice already in mind

Video Streaming 16% 70%

% respondents (post-COVID) Video Conferencing 485%

Leading to need for higher video stability, security etc.

New habit, stickiness Reversal of past REMOTE WAY OF LIVING TRUST IN BRAND unclear trends, likely to be temporary ABOVE ALL ELSE Turn the Tide 1. [Considering average of Rank 1-3 responses. Q: “Thinking about your most recently purchased mobile phone, can you tell me the 3 most important factors which helped decide what product should be bought?" Source: CCI Survey , N=840] 2. [BARC Nielsen – TV + Unlock the new normal Smartphone consumption report during COVID, 7th May 2020] 3. [Q: "Which brands do your current and previous phones belong to?" Source: CCI Survey & BCG analysis , N=840] 4. [Q. “In the next 6 months, how do you expect the choice of your brand to change" (for those increasing expenses); Source: BCG COVID-19 Consumer Sentiment Survey March 23-26, N=2106 ] ; Data shown for urban consumers Consumer Behavior Change in P2P: Purchase and Post-Purchase

PURCHASE POST-PURCHASE

9 Affinity for online will accelerate even more 10 Consumers will expect positives of offline 11 Higher need for at-home or virtual post sales along with safety and convenience of service Online share for mobile phones (in value terms) likely to reach 45% in the next 2 years1 from pre-COVID contact-less purchase 38%2 Traditionally, 3 key barriers to online purchase of mobiles4 - must be addressed for digital conversion 38% 45% Lack of product experience before 1 Pre-COVID Post-COVID buying

55% consumers intend to increase online spends on 3 With social distancing, mobile consumers will want to mobile in the next 6 months Lack of opportunity to leverage salesperson 2 limit store visits for after-sales service knowledge 55%

% respondents 3 No personal relationship (Post-COVID)

Acceleration of existing ACCELERATED Reversal of past BRINGING THE trends, likely to last ADOPTION OF E- trends, likely to be OUTSIDE INSIDE longer term COMMERCE AND O2O temporary Turn the Tide Unlock the new normal 1. [Expert interview and BCG analysis ] 2. [IDC India Mobile Phone Tracker ; % by value] 3. [Q. “In the next 6 months, how do you expect your online spend for the following types of products to change?” Source: BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020, N=1,327] 4. [Q: "List of statements read out for 4 channels and asked to choose which channels are applicable to each of the statement"; Source: CCI Survey, N=840] ; Data shown for urban consumers Deep-dive: Apparel Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

1 SHOPPING TRIGGERS WILL BE MORE FUNCTIONAL AS OPPOSED TO 2 SOME CONSUMERS WILL SEEK ATTRACTIVE PRICING OR MAY BEING LED BY OCCASIONS TRADE DOWN IN CHOICES

Consumers have stopped or reduced going out to meet friends With increased value consciousness, pricing will be 57% 26% Had price in top 3 (1.2x times more in large towns vs. small towns) choice drivers a more important choice driver

% respondents % respondents (post-COVID)1 (pre-COVID)3

Shopped apparels due to With social distancing, less purchases Consumer's brand choices to be impacted by income uncertainty 41% celebratory occasions for specific occasions

% respondents 40% 32% (pre-COVID)2

Will look for discounts among Will trade down to cheaper Shopped apparels due to Value seeking mindset will trigger more 15% those who are increasing brands or lower variants functional requirements utility shopping expenditure in apparel4 of same brand5 % respondents (pre-COVID)2 % respondents (post-COVID)

Reversal of past trends, likely to be SHOPPING TRADING DOWN AND Reversal of past trends, likely to be temporary temporary FOR UTILITY BARGAIN HUNTING 1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus?", "Which statement best describes your behavior since the Lockdown?", Source: BCG COVID-19 Consumer Sentiment Survey, May 18-May 23 2020 (March 23-26, April 17-20 2020, April 30-May 03, May 18-23, 2020 (N = 2,106, N = 2,324, N=1,327 , and N-3276 respectively))], 2. [CCI Survey and BCG analysis, Question Text: Occasion/reason for your last purchase in given apparel subcategory?, N=1218], 3. [CCI Survey and BCG analysis, Question Text: : Thinking about your last purchase for given subcategory, can you tell me the three most important factors which helped decide what product should be bought?, N=1218], 4.[BCG Turn the Tide COVID-19 Consumer Sentiment Survey, Question Text: “Please state the reason to spend more/ less in near future?” , Source: BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = Unlock the new normal 2,324, and N=1,327 respectively))], 5. [BCG COVID-19 Consumer Sentiment Survey, Question Text: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

3 CASUALIZATION OF WARDROBE AND HIGHER DEMAND FOR 4 GIVEN INCREASING FOCUS ON HEALTH AND WELLNESS, THERE COMFORT WITH A MORE “STAY-AT-HOME” LIFESTYLE WILL BE HIGHER DEMAND FOR FITNESS WEAR

Consumers are unwilling to go out of house, except work Increase in time spent on fitness apps2 79% This is impacting their wardrobe needs 1.4x Consumers are becoming increasingly more health conscious

% respondents Increase in Time Spent (post-COVID)1 (post-COVID)3

Market is driven by casual Casual wear expected to become a larger part Increase in demand for fitness related fashion such as 13% wear for men and women of both men/women portfolio athleisure/sportswear

% market share (pre-COVID)2

Comfort in type of clothing and design will be higher in demand with a more at- Precautionary equipment like face masks may become a home lifestyle fashion accessory from essential commodity

New habit, REMOTE WAY Acceleration of existing STRIVE FOR HEALTH & stickiness unclear OF LIVING trends, likely to last longer term WELLNESS Turn the Tide Unlock the new normal 1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus? Combined Strongly agree and somewhat agree", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30- May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 2. [Images retail report, Technopak, Wazir report, Expert Interviews, BCG analysis, 3. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27] Consumer Behavior Change in P2P: Pre-Purchase and Purchase

PRE-PURCHASE PURCHASE

5 WITH MORE TIME ONLINE, DIGITAL INFLUENCE WILL RISE FOR 6 CONSUMERS WILL EXPECT HIGHER STANDARDS OF HYGIENE APPAREL SHOPPERS AS THEY RETURN BACK TO STORES

55-60% urban consumers expected to be digitally influenced1 Consumers likely to return to shops/ malls within a few weeks, once 50% the virus is 'under control‘ Pre-COVID, 45-50% apparel consumers were digitally influenced (used online to discover or research or compare products)1 % respondents (post-COVID)3 45- 55- 50% 60% pre-COVID post-COVID Consumers globally want retailers to focus on high standards of 57% store hygiene, once the lockdown is over Similar behavior expected in India 44% consumers will start/ increase online research % respondents (post-COVID)4 44%

Most prominent for 36-45 years Consumers will need new norms to alleviate their concerns and make them segment comfortable in-store % respondents (post-COVID)2

Acceleration of existing trends, EMBRACING DIGITAL SUPERIOR HYGIENE & CLEAN New habit, stickiness unclear likely to last longer term SERVICES & EXPERIENCES LIVING: A NEW NORM

1. Estimation for 2021 from expert interviews and BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year), 2. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your online research behavior before buying these Turn the Tide types of products?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. [BCG COVID-19 Consumer Sentiment Survey, Question text: “If coronavirus were to be under control, after how Unlock the new normal long do you think your spending would return to normal i.e., similar to before the Coronavirus outbreak?" Excludes those who never did the activity before Coronavirus?”, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 4. BCG COVID-19 Consumer Sentiment Survey, April 17–20, 2020 (N = 5,729 across China, Germany, Italy, UK, and US; unweighted) Consumer Behavior Change in P2P: Purchase

PURCHASE

7 SURGE EXPECTED IN PREFERENCE FOR ONLINE APPAREL 8 CONSUMERS WILL NEED FEEL/FIT/SOCIAL EXPERIENCE ALONG WITH SHOPPING A NEW NEED FOR CONTACT-LESS CONVENIENCE IN SHOPPING

Consumers are planning to increase online spend 40% on apparel Traditionally, there have been 3 key barriers to online purchase of apparel4

% respondents (post-COVID)2 1 Ability to Touch-Feel

Increase in the number of consumers buying 1.3x apparel online 2 Assurance to Fit Increase in respondents (post-COVID)1 3 Experience of shopping in group 90% Consumers who have purchased apparel online during the lockdown and are willing to continue % respondents Consumers will be more open to models like omni-channel/digital innovations, (post-COVID)3 which fulfil their core needs along with new need to socially distance

Acceleration of existing trends, likely to last longer term ACCELERATED ADOPTION OF E-COMMERCE AND O2O

1. [BCG COVID-19 Consumer Sentiment Survey, Question text: “ In the next 6 months, how do you expect your online spend for the following types of products to change?”, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = Turn the Tide 2,324, and N=1,327 respectively))], 2. [BCG COVID-19 Consumer Sentiment Survey, Question text: "Which statement best describes your usage behavior since the Lockdown?] April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = Unlock the new normal 2,324, and N=1,327 respectively))],3. [BCG COVID-19 Consumer Sentiment Survey, Question text: " You mentioned that you have started online purchase of apparel since the Lockdown. How likely are you to continue purchasing apparel online even after the Lockdown gets lifted ?”, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 4. [Fashion Forward 2020, BCG & Facebook Report Consumer Behavior Change in P2P: Post Purchase

POST PURCHASE

9 CORE NEED FOR PEER RECOMMENDATIONS IN APPAREL SHOPPING MAY BE FULFILLED DIGITALLY, WITH GROWING VIRTUAL CONNECT

Consumers rely on peer recommendations and 1 in 2 reviews to buy apparels

% respondents (pre-COVID)1 With more time on social media, impact of digital influencers and recommendations will Consumers on social media learn about products across become more important 40% categories through influencers

% respondents (pre-COVID)2

52% Consumers have increased use of social media

% respondents (post-COVID)3

New habit, REMOTE WAY stickiness unclear OF LIVING Turn the Tide 1. [CCI Survey and BCG analysis, Question Text: Which of the following sources of information influence your decision the most for purchase of apparel?, Source: CCI Survey and BCG analysis], 2.[ Mobile Marketing Association India Mobile Marketing Ecosystem Unlock the new normal Report 2020], 3.[BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] CPG Deep dive: Packaged Food Staples Fresh Food - Food

Copyright © 2020 by Boston Consulting Group. All rights reserved. Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

1 Consumers will trade up in staples and selectively trade up /down in packaged food owing to a more value conscious, yet quality focused mindset

Consumers will trade up across staples and packaged food Consumers will also trade down in packaged food (post-COVID) (post-COVID) 31% 28%

% respondents trading up % respondents trading down

13% 18% 12% 16%

Buy same brand, higher variant Buy more expensive brand Buy same brand, lower variant Buy less expensive brand

Trading up more prominent in SEC A consumers for staples and Trading down more prominent in SEC B consumers for 2x 1.3x packaged food packaged food More than SEC B More than SEC A (post-COVID) (post-COVID)

STRIVE FOR Acceleration of existing trends, likely to Reversal of past trends, likely to TRADING DOWN AND HEALTH & last longer term be temporary BARGAIN HUNTING WELLNESS Turn the Tide 1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 Unlock the new normal respectively))], Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

2 Changes in basket with a more at-home, do-it-yourself lifestyle 3 Surge in demand for specific products/variants with an increased focus on health, hygiene, and wellness

2.7x Rise in viewership of recipes with more home cooking 49% Consumers increase spend on health and wellness products

Increase in % respondents viewership Potential growth in demand for cooking supplies and (post-COVID)3 Spike in demand for healthy variants of food products (post-COVID)1 shelf stable packaged food (packaged and unpackaged)

79% Consumers not going out of home, except work 1.2x Spike in online search on health & immunity

% respondents Increase in 2 With reduced trips for shopping, dip in impulse buys online search (post-COVID) More demand for immunity building food products (e.g., chewing gum) (post-COVID)4

Owing to more 'at home' consumption, drop in demand for smaller SKUs (e.g., buy 100 gm vs 50 gm biscuit SKU with more consumption at home)

Reversal of past BRINGING New habit, ‘D‘O ‘I‘T ‘ Acceleration of existing trends, likely STRIVE FOR HEALTH trends, likely to OUTSIDE stickiness unclear Y‘OURSELF to last longer term & WELLNESS be temporary INSIDE Turn the Tide 1. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27], 2. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How much do you agree with each of the following statements about the coronavirus? Combined Strongly agree and somewhat agree", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: "How do you expect your spend to change Unlock the new normal in the next 6 months across the following areas?” April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 4. [Online Search Trends (India)] Consumer Behavior Change in P2P: Purchase

PURCHASE

4 Consumers will look for buying avenues which provide contact-less convenience while fulfilling their core needs of familiarity and immediacy

Increase in new online buyers for food categories Pre-COVID, top 3 barriers to online purchase of CPG3

1.6x 1.5x 1.4x 1 Need to check product quality Fresh Food Staples Packaged Food Increase in users (post-COVID)1 2 Immediate need for products 80+% New online buyers for food categories likely to continue post-COVID2

3 Easier return and other local store benefits Consumers planning to increase online spend in the next 6 months

44% 51% 47% Consumers will be open to buying models which mitigates these barriers and leverages the convenience of online Fresh Food Staples Packaged Food % respondents (post-COVID)4

Acceleration of existing trends, likely ACCELERATED ADOPTION to last longer term OF E-COMMERCE AND O2O

1 [BCG COVID-19 Consumer Sentiment Survey, Question text: “Which statement best describes your usage behavior since the Lockdown?”, April 17-20 2020, N = 2,324, and N=1,327 respectively], 2. [BCG COVID-19 Consumer Sentiment Survey, categories Turn the Tide considered: Fresh Food, Packaged F&, Makeup, Staples, Personal Care, Home Care & Baby Care, Question text: “You mentioned that you have started online purchase of CPG since the Lockdown. How likely are you to continue purchasing CPG online even after the Lockdown gets lifted?”, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. . [BCG, Retail 4.0: Winning the 20s, Feb 2020],4. BCG COVID-19 Consumer Sentiment Survey, Question text: Unlock the new normal "Which statement best describes your usage behavior since the Lockdown?] April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] Consumer Behavior Change in P2P: Post Purchase

POST PURCHASE

5 Post purchase advocacy will continue to be important; digital will be a powerful medium

Consumers rely on Word of Mouth (WoM) for first online 1 in 2 purchase in CPG

% respondents (pre-COVID)1 With more use of social media, significance of social media as a platform for Consumers will start/ increase online research before purchasing 44% recommendations and thus discovery will go up food related sub-categories e.g., sharing recipes, reviews of food products, % respondents food related content etc. (post-COVID)3

52% of all consumers have increased use of social media

% respondents (post-COVID)2

New habit, REMOTE WAY OF stickiness unclear LIVING

Turn the Tide 1. [CCI Survey and BCG analysis, Question Text: "Can you tell us the reasons of what made you buy food & grocery online the first time?", N= 6000 transactions] , 2.[BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] ,3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best Unlock the new normal describes your online research behavior before buying these types of products?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] CPG Deep dive: Cosmetics PersonalCare Home Care - Non - Food

Copyright © 2020 by Boston Consulting Group. All rights reserved. Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

1 Consumers will trade up in home care, trade down in cosmetics, and selectively trade up /down in personal care owing to a more value conscious, yet quality focused mindset

Home Care Personal Care Cosmetics Personal Care

(post-COVID) (post-COVID) (post-COVID) (post-COVID) 29% 24% 33% 29% % respondents trading up % respondents trading up % respondents trading down % respondents trading down

24% 5% 9% 15% 14% 19% 16% 13%

Buy same Buy more Buy same Buy more Buy same Buy less Buy same Buy less brand, higher expensive brand, higher expensive brand, lower expensive brand, lower expensive variant brand variant brand variant brand variant brand

Trading up more prominent in SEC Trading up more prominent in SEC Trading down more prominent in 18-25 Trading down more prominent in 2x A consumers for home care 2x A consumers for personal care 1.4x years consumers for cosmetics 1.4x SEC B consumers for personal care More than SEC B More than SEC B More than 26+ years More than SEC A (post-COVID) (post-COVID) (post-COVID) (post-COVID)

STRIVE FOR Acceleration of existing trends, likely Reversal of past trends, likely to TRADING DOWN AND HEALTH & to last longer term be temporary BARGAIN HUNTING WELLNESS Turn the Tide 1. [BCG COVID-19 Consumer Sentiment Survey, Question Text: “In In the next one how do you expect the choice of your brands to change?”; April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 Unlock the new normal respectively))], Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

2 Surge in demand for specific products/variants with an 3 Changes in basket with a more at-home, do-it-yourself lifestyle increased focus on health, hygiene, and wellness

Rise in time spent on self help/personal care videos as Indian households washing hands more often 91% 2.8x consumers are avoiding salons % respondents Increase in time (post-COVID)2 14x jump in online sales of personal care products (post-COVID)1 Increase in demand for personal care products such as such as sanitizer from Feb – March3 depilatories, hair dyes, and face masks

47% Indian households claim increased home/toilet cleaning 79% Consumers not going out of home, except work

% respondents % respondents Increase in demand for disinfecting & cleaning home With reduced trips for shopping, dip in impulse buys (post-COVID)2 (post-COVID)4 care products (e.g., surface cleaners) (e.g., lip balms)

SUPERIOR BRINGING Acceleration of existing trends, likely Reversal of past trends, likely to be HYGIENE & CLEAN LIVING: A OUTSIDE to last longer term temporary NEW NORM INSIDE Turn the Tide 1. [Nielsen, Nielsen TV and Smartphone report, Week of March 30 vs Week of April 27] ,2. [Kantar, COVID-19 Barometer India Research Webinar, 3rd April], 3. Press Search: [Livemint, Covid-19 impact: Sanitiser market sees more entrants] , 4. [CCI Survey and BCG Unlock the new normal analysis, Question Text: "Can you tell us the reasons of what made you buy food & grocery online the first time?", N= 6000 transactions] Consumer Behavior Change in P2P: Pre-Purchase

PRE-PURCHASE

4 Salience of digital influence to rise for home care, personal care, and cosmetics; more consumers will increase online research across these categories

~1.3x rise expected in share of digitally influenced urban consumers 30-40% urban consumers will start/ increase online research

Increase in digital influence among urban consumers for non-food ~1.3x 30% 35% 38% categories Post-COVID 1 Homecare Personal Care Cosmetics Most prominent for Most prominent Most prominent for Online channels will play a more important role for product 26-35 years for SEC B 18-35 years discovery, research, and comparisons segment consumers segment

% respondents (post-COVID)2

With 52% consumers planning to increase time on social media3, it will be an important platform for product discovery and research

Acceleration of existing trends, likely to last RISE OF SMART longer term SHOPPER

Turn the Tide 1. Estimation for 2021, Expert Interview, BCG CCI Digital Influence Study 2017 analysis (N=18,000 per year); 2. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your online research behavior before buying these types of products?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across Unlock the new normal the following areas?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] , Consumer Behavior Change in P2P: Purchase

PURCHASE

5 Consumers will look for buying avenues which provide contact-less convenience while fulfilling their core needs of familiarity and immediacy

Increase in new online buyers for non-food categories Pre-COVID, top 3 barriers to online purchase of CPG3

1.45x 1.3x 1.35x 1 Need to check product quality Home Care Personal Care Cosmetics Increase in users (post-COVID)1 2 Immediate need for products 84+% New online buyers for non-food categories likely to continue post-COVID2

Consumers planning to increase online spend in the next 6 months 3 Easier return and other local store benefits

51% 46% 43% Consumers will be open to buying models which mitigates these barriers and Home Care Personal Care Cosmetics leverages the convenience of online

% respondents (post-COVID)4

Acceleration of existing trends, likely ACCELERATED ADOPTION to last longer term OF E-COMMERCE AND O2O

1 [BCG COVID-19 Consumer Sentiment Survey, Question text: “Which statement best describes your usage behavior since the Lockdown?”, April 17-20 2020, N = 2,324, and N=1,327 respectively], 2. [BCG COVID-19 Consumer Sentiment Survey, categories Turn the Tide considered: Fresh Food, Packaged F&, Makeup, Staples, Personal Care, Home Care & Baby Care, Question text: “You mentioned that you have started online purchase of CPG since the Lockdown. How likely are you to continue purchasing CPG online even after the Lockdown gets lifted?”, April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))], 3. [BCG, Retail 4.0: Winning the 20s, Feb 2020],4. BCG COVID-19 Consumer Sentiment Survey, Question text: Unlock the new normal "Which statement best describes your usage behavior since the Lockdown?] April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] Consumer Behavior Change in P2P: Post Purchase

POST PURCHASE

6 Post purchase advocacy will continue to be important; digital will be a powerful medium

Consumers rely on Word of Mouth (WoM) for first online 1 in 2 purchase in CPG

% respondents (pre-COVID)1 With more use of social media, significance of Consumers will start/ increase online research before purchasing social media as a platform for 35% non-food related sub-categories recommendations and thus discovery will go up e.g., sharing easy beauty tips, personal care % respondents hacks etc. (post-COVID)3

52% of all consumers have increased use of social media

% respondents (post-COVID)2

New habit, REMOTE WAY OF stickiness unclear LIVING

Turn the Tide 1. [CCI Survey and BCG analysis, Question Text: "Can you tell us the reasons of what made you buy food & grocery online the first time?", N= 6000 transactions], 2. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best describes your usage behavior across the following areas?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))] ,3. [BCG COVID-19 Consumer Sentiment Survey, Question Text: " Which statement best Unlock the new normal describes your online research behavior before buying these types of products?", April 30-May 03 2020 (March 23-26, April 17-20 2020, April 30-May 03 2020 (N = 2,106, N = 2,324, and N=1,327 respectively))],