Turn the Tide | Unlock the New Consumer Path to Purchase

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Turn the Tide Unlock the new consumer path to purchase

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

TurnTurn the the Tide Copyright © 2020 by Boston Consulting Group. All rights reserved. UnlockUnlock the the new normal normal Great [leaders] rejoice in adversity just as Covid-19 is an brave soldiers triumph in war unprecedented —Lucius Annaeus Seneca epidemic

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

Facebook company TurnTurn the the Tide UnlockUnlock the the new normal normal While the pandemic is far from over, signs of recovery are starting to show Pandemic spread in different degrees across the globe Spread of disease starting to slow down in India

As of 21 May 2020

~4.9M 188 8.6 Decline 13.2 Confirmed cases globally1 Countries with cases1 days days Doubling rate2 April 21 May 17 UK France 6 0-3 days Spain Italy USA China Japan Iran 3-6 days India South Decline Korea 170 130 6-14 days No. of red zones3 14-30 days April 15 May 01 As of 29 April 2020 April 29 As of

Days of doubling cases >30 days

Increase ~0.1M ~45K ~64K 15%4 ~40%5 Recovery Rate Total no. of cases1 Recovered1 Active1 April 19 May 20

Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards and hence imperfect measures 1. [ NDTV Corona Virus - Live Statistics Data - accessed on 21st May 2020] 2.[BCG Analysis, Source: Ministry of Health & Family Welfare (MoHFW) website; Press reports]; 3. Press Search [Deccan Herald] [Coronavirus: Turn the Tide Red zone districts reduce from 170 to 130 in a fortnight]; 4. Press Search [The Economic times] [India's COVID-19 recovery rate has improved to 24.56 pc: Niti CEO]; 5. Press Search [The Economic times] [Coronavirus in Unlock the new normal India: Recovery rate at 40%; only 6.39% cases needed hospital support]; 6. [BCG Analysis - No. of doubling days based on 7 day CAGR, Source: John Hopkins CSSE data] The pandemic impacts the health and socio-economic fabric; lives of consumers will not be the same The pandemic has created a Social distancing and structural Uncertainty around income and Consumer priorities being never-before focus on health & interventions will drive faster weakened demand potential in re-calibrated; certain behavior safety recovery near term changes will stick long term

HEALTH & SAFETY PUBLIC POLICY ECONOMICAL SOCIAL

7 11 1 4 Public Health Consumer Sentiment COVID-19 Cases Measures Income Uncertainty 8 of 16 categories expected to see 0.1M+ total cases in India1 Social distancing enforced via • 60% of total household expenditure in hotspots; 6 reduced spends in next 6 months11 nation-wide lockdown 45% of consumption in hotspots non-essential • 198M workforce employed in hotspot districts7 12 2 5 Web Traffic trends Web Trends Industry Medicine and Beverages with highest traffic 8 growth12 ~120% spike in online searches on health Guidelines Inflation / Price Indicators8 2 & immunity in India post COVID 12+ industries4 got relaxation in • 70 bps drop in CPI 13 Media, Smartphone Usage restrictions • 130 bps drop in WPI Globally, average across 3 ~3Bn MAUs 9 Facebook, WhatsApp, Instagram & 6 Trade / Logistics Indicators9: Demand of health products Messenger13; 12.5% increase in Monetary • 35% decline in exports and 49% consumers intend to buy more Relief Measures smartphone screen time (April vs Pre- 29% decline in imports 14 vitamins, herbs and supplements in the ~$13Bn infusion by monetary relief COVID) coming days3 • 14% decline in retail freight traffic measures by RBI5 14 10 Mobility Market Sentiment Indicators10: 40%+ reduction in number of visits to 20% decline in Nifty index since 1st Feb public places due to lockdown and social distancing15

Source: 1. [ NDTV Corona Virus - Live Statistics Data - accessed on 21st May 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 – Guidelines released on 15th April 2020 ] 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: BCG COVID-19 Consumer Sentiment Survey] 12.[BCG Turn the Tide Analysis, Source: SimilarWeb data *www.similarweb.com] 13. [Facebook Q1 2020 Earnings Release/ Call Transcript – 2.6Bn users just on Facebook] 14. [BARC Nielsen – TV + Smartphone consumption report during crisis, 9th April Unlock the new normal 2020] 15. [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 keeps social distancing post South Korea COVID-19 -qz.com Strict social distancing guidelines issued for reopening workplaces3 Hong Kong extends social distancing Hong Kong Non-Exhaustive measures as cases drop -Bloomberg Seating at least Gap of 1 hr. Globally strict measures followed to ensure social distancing 6 feet away between shifts & Up to 15 April 2020 from others on stagger lunch job sites breaks Closed public Closed 10+ 19+ transportation1 workplaces1 Countries Countries

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, Turn the Tide 2020]; 3. Press Search; [Live Mint] [Coronavirus lockdown rules for offices: 6 feet apart seats, one hour gap between shifts] Unlock the new normal Even in the face of adversity, there are some companies who pro-actively find opportunities to grow 18% of Indian companies1 improved both growth & margin Globally too, there are success stories of companies during the 2008-09 Global Financial Crisis, while 37% weathering historical crisis declined in both2 AMERICAN Increasing sales growth EXPRESS

American Express was severely threatened in the 2008 financial A crisis by rising default rates and falling consumer demand. The company pivoted on new partnerships and embraced digital 21% 18% technology. Its stock price has risen by >1,000% in the decade since3 Shrinking Expanding EBIT margin EBIT margin Uniqlo – a retail brand in Japan – grew from 5% to 30% market B share in 2 years of downturn (1999-2000) while growing margins – by pivoting their business model towards the white space of 37% 24% consumer need created by the crisis4

UNIQLO

Falling sales growth 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 Turn the Tide three-year pre-downturn baseline (from FY'06 to FY'09); Source: S&P Capital IQ Financial Statements] 3. BCG Article [Advantage in adversity: winning the next downturn] 4. [BCG Analysis, Source: BCG Valuescience, Analyst Unlock the new normal reports, Annual Reports] As the current crisis unfolds in India, near term potential exists in pockets – need to look at the de-averaged picture

More than 22 states have less than 20% cases1 Avenues may lie in different pockets District classification as per MoHFW guidelines on 15 Apr 218 Data as of 23 Apr Very High : >=10% of 80% Non - infected districts pan India cases 45 cases High : >=3%, <10% of Non-Exhaustive Non - hotspot districts 3

pan India cases ) Hotspot districts Jammu and Ladakh (18) Kashmir (407) Med : <3% of pan 121 India cases 91 116 73% 13 Punjab (277) Himachal Pradesh (40) No cases 11% Chandigarh (27) Uttarakhand (46) 72 24 Haryana Arunachal Pradesh (1) Delhi (2248) (262) Meghalaya (12) Uttar Population (Millions 81 35 79 Rajasthan Pradesh Bihar Assam (35) Rural sub-districts Metro and Tier 1 Cities (1890) (1509) 13 (148) Manipur (2) % population in non-hotspot or non- Jharkhand Tripura Uttar (2) 2 Maharashtra Bihar Madhya Pradesh (49) Mizoram (1) infected districts Pradesh (1695) Chhattisgarh Gujarat(2407) (36) Odisha Maharashtra West Bengal (83) (5652) (456) Companies should strategically prioritize re-

Telangana (960) opening and scaling up business as lockdown starts easing across regions Goa(7) Andhra Pradesh (895) Karnataka(443)

Pondicherry (7) Potential to target specific- micro-markets Kerala Tamil Nadu (1629) further along recovery to 'normal' (438) Andaman and Nicobar Islands (18) Turn the Tide 1. [BCG Analysis, Source: Ministry of Health & Family Welfare (MoHFW) website; Press reports]; 2. [BCG Analysis, Source: Nielsen-Indicus database 2017-18, BCG Center for Consumer Insight, Press reports (Data compiled Unlock the new normal in 2017-18)]; 3.[BCG Analysis, Source: Nielsen-Indicus database 2017-18, BCG Center for Consumer Insight, Press reports (Data compiled in 2017-18)] Spending sentiment translating differently across categories; marketers need to react accordingly

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-03th May Categories with net decrease in spends 23-26th Mar 17-20th Apr 30 Apr-03th May

Fresh foods Vacation/leisure travel

Staples Business travel Travel Public transport Household care products Daily essentials Spas, theme parks, concerts Personal care products Restaurants OOH Utilities (electricity, water) Entertainment Movies at cinema hall Mobile services Luxury brands/products

Home wifi connection Cosmetics, makeup, perfume Apparel/fashion Paid OTT subscription At-home Discretionary spends Tobacco & smoking supplies entertainment DTH services Alcohol Toys & games Food delivery Savings Sports equipment & clothing Saving/ Investments Insurance Electronics Non-mobile consumer electronics Preventive diagnostics/test Mobile electronics Home construction/renovations Vitamins, herbs, supplements Home Home furnishings and décor Medical procedures Health Scooters/bikes First-aid Auto Cars Education Education Packaged food & beverage 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 Turn the Tide Box > (5% more than average) 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) Overall older & higher SEC consumers have relatively positive outlook

Income1 Spends2 Amidst the growing

% expecting lower % expecting higher % expecting decrease in % expecting increase income uncertainty, income in the next 6 income in the next 6 total spends in next 6 in total spends in next opportunity to months months months 6 months identify and sharply 52 22 SEC A 42 34 target least impacted 60 14 SEC B 47 24 61 14 48 28 micro-segments 18-25 yrs. 52 23 41 34 26-35 yrs.

51 21 41 34 36-45+ yrs. 1. Question text: “How do you expect your overall available household income to change in the Next 6 months as compared to before lockdown?". Note: Self-employed includes professions like doctors, CAs, yoga instructors, etc. Small business includes businesses with <10 employees and shop owners ; 2. Question text: "How do you expect your overall spends to change in the Next 6 months as compared to before lockdown?" Note: Self-employed includes professions like doctors, CAs, yoga instructors, etc. Small business includes Turn the Tide businesses with <10 employees and shop owners; Source: BCG COVID-19 Consumer Sentiment Survey April Unlock the new normal 30-May 03 2020 (N = 1,327) The most fundamental change from this crisis is the change in consumer behavior

SOCIAL DISTANCING: HEALTH AND HYGIENE: INCOME UNCERTAINTY: The new normal Top of the mind Here and now concern

~85% 49% 54% Reduction in number of Consumers intend to buy Consumers expect overall Retail & visits to public places more vitamins, herbs and household income to recreation compared to baseline1 supplements in the reduce in the next 6 coming times2 months3

Turn the Tide 1. . [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] 2. Question text: “How do you expect your Unlock the new normal spend to change in the next 6 months across the following areas?” [BCG COVID-19 Consumer Sentiment Survey 30-May 03 2020 (N=1,327)] 3. “How do you expect your overall available household income to change in the Next 6 months as compared to before lockdown?"[BCG COVID-19 Consumer Sentiment Survey 30-May 03 2020 (N=1,327)] These themes will create different types of changes in consumer behavior – some more long lasting than others

REVERSAL OF PAST ACCELERATION OF EXISTING NEW HABITS TRENDS TRENDS 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 Consumer behavior was already moving Entirely new habits developed during the consumers were behaving in the past towards these trends pandemic and while social distancing

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

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

Turn the Tide Unlock the new normal 11 trends of consumer behavior emerge This will deeply impact purchase pathways in the new normal REVERSAL OF PAST ACCELERATION OF NEW TRENDS EXISTING TRENDS HABITS

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

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

Wild cards: likely to be temporary High potential permanent shifts: Stickiness of change is yet to be surges in line with recovery period linked to positive reinforcement determined Turn the Tide Unlock the new normal 11 trends of consumer behavior emerge This will deeply impact purchase pathways in the new normal REVERSAL OF PAST ACCELERATION OF NEW TRENDS EXISTING TRENDS HABITS 51% consumers saw 60% increase an increase in in Instagram 1 5 payment via digital9 Live views in a Bringing the Embracing digital 4 6 wallets Remote way of living week Outside Inside services & experiences 79% consumers are not going 1 6 10 Social out of house, except work Accelerated adoption50% of Spike in new of all consumers expect 'D'o 'I't 'Y'ourself hobbies and Distancing e-commerce and O2Oto increase e- habits commerce spend in 5 7 next 1 month 11 63% consumers are paying Strive for Health & Superior hygiene & more attention to origin of Wellness clean living: a new norm91% Indian product2 households 40+% may increase washing hands Health & spend on Health & more often7 2 8 Wellness8 Hygiene Trust in brand Rise of 'Smart shopper' above all else

3 43% consumers are expecting Informed purchase Trading down & decision; High salience decrease in overall spend in next 6 of digital research bargain hunting months3 Income 4 Uncertainty Purchase triggers expected to Shopping for Utility become more "functional"

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

1. Question text: “What is your likely behavior for following activities once the Lockdown is lifted?"[BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 (N=1,327)] 2. [KANTAR – COVID-19 Barometer India Research rd Turn the Tide report – 3 April 2020] 3. "How do you expect your overall spends to change in the Next 6 months as compared to before lockdown?" [BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 (N=1,327 respectively)] Unlock the new normal 4.“How would you describe your usage behavior in past 1 month?" [BCG COVID-19 Consumer Sentiment Survey April 17-20 2020 (N = 2,324)] 5. BCG COVID-19 Consumer Sentiment Survey (India), March 23-26 2020 6. [Facebook India Data - Week ending March 28 vs Week ending March 17] 7. [KANTAR – COVID-19 Barometer India Research report – 3rd April 2020], 8. [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 (N=1,327)] 1 Bringing the With social distancing, indoor is becoming the new Outside Inside outdoor

Pre-COVID, consumers showed inclination towards Outdoor movement will likely continue to be restricted; experiences consumers trying alternatives3

1 77% consumers indulged in experiences Immediately Within a few Within a few In 1 year or Never after weeks months more % respondents who did the 61 experience last year 49 Movies in theatre 12% 31% 38% 14% 5% 33 29 20

Travel Entertainment Indulgence Adventure Personal Eating out 14% 33% 39% 13% 1% Development With lockdown, consumers are being forced to stay indoors2

RETAIL & Trying to avoid Keeping a distance Not going out of house, RECREATION WORK SOCIALIZE public places in crowds except work

'Old hobbies become Working from home4 'Social Bonding in % % % survival mantra for many Physical Distancing' - 85 87 79 during lockdown' - TOI 79% Indian Express

1. Question: In last 1 year, did you indulge in the mentioned experiences at least once? [BCG – Emerging consumer trend report, 2019] 2. Question text: “What is your likely behavior for following activities once the Lockdown is lifted?" [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 (N=1,327)] 3. Question text: “If coronavirus were to be under control, after how long do you think your spending would return to normal i.e., similar to before the Coronavirus outbreak?" [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 ( N = 1,327)]; 4. % respondents who selected "I'm working from home now instead of going to office/ work place [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 ( N = 1,327)]; Turn the Tide Unlock the new normal Source: Press Search 1 Bringing the Outside Opportunity for brands to customize offerings and Inside communication for in-home consumption

In India, the ‘Stay Home’ & times on ‘Ghar Pe Raho’ sticker was used over 6M Instagram1

Brands adapting campaign messaging Brands offering interesting things to do Brands delivering outdoor services inside 1 around 'Stay at home' 2 while ‘Stay at home’ 3 your homes

Zee5 Global launched the 'stay home, stay entertained' Telecom players SBI launched campaign and used Facebook to #GharSeBanking leveraged Facebook drive awareness for campaign on Facebook to to scale their staying safe at home maximize the adoption of subscription and promoting digital banking products program, catering to in the wake of the country online transactions entertainment for recharge at home wide lockdown seeking consumers in lockdown

Source: Facebook case studies; 1. Facebook Internal Data Turn the Tide Unlock the new normal 2 Trust in brand above all else Consumers gravitating to Opportunity for all brands to brands they can trust deepen relationships

Consumers focusing on origin of product and brand's Limited co-relation between brand awareness response to the crisis; loyalty to trusted brands continue and trust across categories (25-50%)3

Thus fair game for large / small / established / Believe that brand's response to crisis would have impact on future new brands to establish trust 65% purchase likelihood1

63% Paying more attention to origin of products2 Opportunity to build deeper customer relationships by responding to the crisis and being 2 59% Continuing to purchase same brand as always their "lockdown and transition Focus on product origin is much more pronounced in India partner" 2 than other countries Opportunity for "Made In India" USA 35% play in messaging for categories where consumers will care more India 63% about local sourcing / product UK 25% origins South Korea 46%

Italy 40% 1. [Edelman trust Barometer,2020 (Global number; Germany 20% report includes India)] 2. [KANTAR – COVID-19 Barometer India Research report – 3rd April 2020]; 3. Turn the Tide France 34% Data of only urban consumers [Source: CCI Survey & BCG Unlock the new normal analysis] 2 Trust in brand above all else Both established and niche players are stepping up to deepen consumer relationship by building trust

Responding to crisis and being "lockdown and Pivoting on "Made in India" transition partner" themes

Facebook’s ‘I For India’ concert to raise FB funds for GiveIndia COVID-19 relief Give Raised for India Top Indian and 85+ 60+ Cr COVID-19 Global stars relief ZOHO Launched 'Swadeshi Sankalp', to provide online platform for classes and free classes to govt. schools. Also providing Launched Ola Emergency service to help free customer support software to govt. OLA citizens who are in need of taking medical & meeting spaces trips amidst lockdown

Launched #RadissonCares across social J&J media platforms to bring insights in Radisson housekeeping, F&B, elderly, health & Tulips J&J & Tulips are going to supply "Made in wellness care India' nasal and throat swabs for testing COVID Turn the Tide Unlock the new normal Source : Company website; Press/ Social Media search; Facebook Case Studies 3 Trading down & bargain Markets may witness trading down in the short term; hunting micro-market opportunities will emerge

Income uncertainty creating mixed sentiment; Expectation of deals/discounts is one Majority of those who reduce spends Both planned reductions & increased spends of the key reasons to increase will prefer to buy a cheaper expected across categories1 spends2 brand/variant3

Overall SEC SEC 18-25 26-35 36-45+ A B yrs. yrs. yrs.

32 34 24 28 34 34 ~35% ~70% 43 42 47 48 41 41

% expt. increase in total spends in the next 6 months Expecting discounts across Planning to buy cheaper brand/ % expt. decrease in total spends in the next 6 months categories variant

Target micro- segments with more Explore value for money offers (e.g. Prop up value for money variants in resilience (affluent, older etc.) in discounts on volume / loyalty etc.) portfolio and proposition to win this targeted campaigns to attract this segment segment

1.Question Text: "How do you expect your overall spends to change in the Next 6 months as compared to before lockdown?" 2. Average % of respondents across select categories expecting deals/ promotions/ discounts (as a % of consumers who are planning to increase spends) 3. Min % of respondents planning to buy a cheaper brand/ variant across select categories from consumer sentiment survey (as a % of consumers who are planning to reduce spends) Turn the Tide Unlock the new normal Source: BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 (N = 1,327) 4 Shopping for utility Value consciousness will lead to more utility led shopping; right triggers can induce purchase

Purchases across many categories have been driven by more Marketers are designing their brand messaging celebratory/experimental needs1 around in-demand use cases3

Eat-out 15 20 22 30 12 Eat out restaurants like Dominos are highlighting 15 42 12 12 20 additional utility around Apparel ordering home delivery like reduced work around cleaning Functional Celebratory Spontaneous Experimental Ritualistic Upgradation dishes etc. With growing income uncertainty purchase triggers expected to become more 'functional' Japanese creative Consumers are expecting lower income in the next 6 months2 agency Whatever collaborated 54% with Japanese fashion Transition in purchased triggers designer Akihiko Kimura to create WFH Jammies, an outfit that "I must plan a party for Friday "I am too tired working the whole week, looks formal on video, but is evening should probably order home delivery loose & comfy outside the frame "Let me experiment with this "I need to replace my jeans because these new style of jeans don't fit me

1. Question Text: Now I want you to think about the last time you purchased XYZ, what was the occasion/reason for your purchase? Data of only urban consumers [BCG Analysis, Source: CCI Survey]; 2. Question text: “How do you expect your overall available household income to change in the Next 6 months as compared to before lockdown?" [Source: BCG COVID-19 Consumer Sentiment Survey, April 30-May 03 2020 (N Turn the Tide Unlock the new normal = 1,327 respectively) 3. Press/ Social Media search Embracing 5 digital services & Acceleration in digital led by social media; more experiences consumption across news, games & entertainment

Social media growing in importance as one stop for staying connected, entertained and well-informed

Increasingly wide reach – 3 Bn Increased preference for virtual consumers actively using Facebook, connects - Voice and video calling more Instagram, WhatsApp or Messenger than doubled across Messenger and each month1 WhatsApp in hardest hit places by COVID1

INCREASED DEMAND FOR DIGITAL MORE TIME SPENT PLAYING ONLINE INCREASE IN CONSUMPTION OF CONTENT GAMES ONLINE NEWS

Content producers are New Players are entering Engagement observed Social gaming apps are COVID-19 serves a blow Consumers are planning turning towards OTT the OTT segment across the day2 gaining popularity3 to print media to continue behavior Producers court OTT Snapdeal enters the OTT “The most interesting thing "Activity on social features of COVID-19 hits print platforms to cash in on race, partners with is that while our user peak WinZo Games such as usage of media hard-ads as summer movie season Hungama play to offer was between 8 pm and video and audio while playing circulation dip, editions - The HINDU video streaming content midnight, we now see a the game have also doubled" see major digital push 63% - Business Insider relatively flatter (and – Co-Founder WinZo games - ThePrint higher) engagement throughout the day – % new users likely to Founder, Rein Games continue in future4

1. Facebook Q1 2020 Earnings Release/ Call Transcript - 2.6Bn MAUs just on Facebook 2. Press Search [YourStory] [Online gaming startups see a surge as India locks down to fight coronavirus]; 3. Press Search Turn the Tide [Economic Times] [For Indian gaming startups, Covid-19 lockdown is a boon for business]; 4. Question Text: "Willingness to continue in next 6 months" [BCG COVID-19 Consumer Sentiment Survey April 17-20 2020 Unlock the new normal (N = 2,324)] ;Source: Press/ Social Media search Embracing 5 digital services & Consumers embracing digital in historically offline experiences categories like Education & Health and Fitness Traditional learning models faced an unprecedented setback and Social distancing and increasing health awareness led to interest in digital emerged digital health services

32 Cr. 90 Mn 24 K

Students hit by COVID-19 as schools and colleges are shut1 Health conscious individuals3 Gyms and Studios across India impacted3

Kendriya Vidyalayas go COVID-19 : COVID-19 lockdowns: Theaters, gyms to be shut Coronavirus is making Locked gyms due to digital to impart IIT Roorkee resumes AICTE releases list of 41 in Mumbai, 5 other cities India's gyms and dance Coronavirus outbreak! education during teaching through digital free digital resources for in Maharashtra over studios sweat How fitness industry sees lockdown mode students coronavirus - Yahoo Finance innovation and growth - NDTV - HT Media - HT Media - HT Media - Financial Express

Unacademy Learning App Sadhguru - Yoga, Meditation & Spirituality Cure Fit

Increase in time spent2 Increase in time spent2 Increase in time spent2 101% 202% 120% Unacademy launched 20,000 free live classes4 Online Yoga Practice sessions to Cult fit started online classes to support help immunity consumers to workout from home5

1. Press Search: [ThePrint] [In India, over 32 crore students hit by Covid-19 as schools and colleges are shut: UNESCO]; 2. [BCG Analysis, Source: App annie data (Time spent data) – Change comparison March 4th Week vs March 1st Week] 3. Press Search: [LiveMint] [How India pays for fitness]; 4. [Unacademy Blog – 12th March 2020]; 5. Press Search [Business Insider] [Cult.fit goes online to support people to workout from Turn the Tide Unlock the new normal home amidst Corona shutdown] Embracing 5 digital services & experiences Digital payment platforms

become more important in Sharp rise across digital payments in With strong likelihood to continue in the customer purchase the last 1 month… the next 6 months Digital wallets journey % consumers1 % consumers2

RBI pushes digital payments in the 51% 25% 25% 60% 22% 18% time of COVID-19 - Economic Times

Net banking/online banking NPCI urges India to use digital

payments to reduce social contact 46% 30% 25% 50% 30% 20% and contain Covid-19 outbreak - NPCI Press release Increased Same Decreased More than usual Same Less than usual

We are seeing an uptick in our switch partners from There is a 15% increase in incoming requests whom our users can buy essentials/staples such as from offline merchants to partner with Paytm3 FinTech to the rescue: Rural India groceries, medicine and food3 – PAYTM spokesperson turns to digital modes of payment – PhonePe Spokesperson - The Banking & Finance Post

1. Question text: "How would you describe your usage behavior in past 1 month" [BCG COVID-19 Consumer Sentiment Survey, April 17-20 2020 (N = 2,324)] 2."How do you expect your usage behavior to change in the Turn the Tide next 6 months" [BCG COVID-19 Consumer Sentiment Survey, April 17-20 2020 (N = 2,324)]; 3. Press Search Unlock the new normal [LiveMint] [COVID-19: Digital payments see uptick in user base] Embracing 5 digital services & Brands have started using digital extensively to attract experiences and engage consumers

Exploring new digital models and service innovations

Cult.fit BMW Penguin eat shabu Launched telemedicine services & is Launched an immersive shopping Promoted to-go boxes with Facebook posts & offering 80+ online sessions daily, with experience online with a touch of customers could order through Messenger – over 25k+ members personalization achieved 350 sales in one min

Use of digital marketing to deliver broader brand communication goals

Swiggy MAX Health Insurance Nykaa Using app, Social media & blog for Digital Vernacular video led campaign on OTT for Launched Nykaa Network, an online-only PR, safety standards and thought leadership #IgnoreNahiInsureKaro beauty forum to share beauty tips and strengthen brand persona

Leveraging digital to engage with consumers

WHO Asian Paints UpGrad Launched the #SafeHands challenge on Initiated the #HarGharKuchKehtaHai Collaborated with influencers on social media platforms like Instagram, campaign on Instagram to interact Instagram to promote upskilling campaign partnering with celebrities with the consumers in lockdown #rahoambitious Turn the Tide Unlock the new normal Source: Press/ Social media search, Company website, Facebook case study Accelerated 6 adoption of E-commerce and O2O Surge in preference for online channel sharper in India

Household Personal Fresh Packaged Health care (%) care (%) food (%) food (%) supplements (%)

China 19 22 7 9 7

India 33 44 31 34 43

Brazil 4 5 0 2 3

Indonesia 18 33 12 13 47

Thailand 9 11 -16 3 26

Philippines -6 -7 -12 -17 14

The reduction in e-commerce was caused by a shortage of delivery staff due to a strict lockdown

Source: BCG COVID-19 Consumer Sentiment Survey, 2020 (N = 1,255 Brazil; 2,532 China; 2,106 India; 1,528 Indonesia; 1,017 Thailand; 1,015 Philippines). Turn the Tide Unlock the new normal Note: Question was “In the next one month, how do you expect your online spend for the following types of products to change?” (Focus on income segments middle class and higher.) Accelerated 6 adoption of E-commerce Indian consumers may spend higher on E-com, even for and O2O traditionally offline categories

~50% of all consumers expect to increase E-com spend in next one month

37% 38% 34% 35% 45% 42% 38% 39% 39% 45% 64% 64%

53% 55% 55% 54% 44% 44% 48% 47% 46% 43% 30% 31%

Apparel/ fashion Mobile phones Household Personal care Cosmetics, Packaged food Non-prescription Fresh foods Consumer durables Home appliances First aid Vitamins, care products products makeup, perfume & beverages medications supplements

Historically Low online High online propensity moderately online propensity

Same More than usual

Note: Question text: “In the next one month, how do you expect your online spend for the following types of products to change?” Turn the Tide Unlock the new normal Source: BCG Analysis - BCG COVID-19 Consumer Sentiment Survey (India), March 23-26 2020 7 Strive for health and Consumers increasingly becoming wellness This presents an interesting more health conscious opportunity for brands across categories Spike in online searches on health & 120% 1 immunity Opportunity for H&W players to emerge as category leaders and 2 44-52% respondents may increase spends across sub- categories demonstrate thought advocacy

23 25 23 17 Opportunity for brands from other categories to enter lucrative 25 26 29 27 adjacencies in H&W

Opportunity to engage and attract

Preventive Vitamis, herbs, Medical First-aid consumers with tailored messaging diagnostics/test supplements procedures around health and wellness A lot more Somewhat more

1. [BCG Analysis: Online trend data (India) – April 1st week vs Jan last week]; 2. Question text: “How do you expect your spend to change in the next 6 months across the following areas?” [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 (N=1,327)]; Press search, trends analysis, BCG Turn the Tide Analysis Unlock the new normal 7 Strive for health and Brands are demonstrating leadership, entering lucrative wellness adjacencies and highlighting benefits around H&W

Demonstrate category Expand Engage and Attract with leadership into adjacencies messaging around H&W

Launched Tulsi Drops immunity Turned their Instagram page into a Dabur booster packs to capitalize on the Kiehl's virtual mental health and wellness FirstCry launched a Thought preventive healthcare trend centre Leadership campaign using FB Live to engage and help new parents through Live Online sessions during COVID-19 GCPL expects shift in consumer Partnered the initiative 'Muskurayega habits with a greater focus on health, India' to help build hope & mental Godrej hygiene - evaluating launch of new Star wellness in these times products in the category

Practo partnered with Thyrocare to conduct Launched ‘Haldi doodh’ (turmeric Launched a digital film on Athletics Practo Covid-19 detection tests to Amul latte) known for immunity boosting Fastrack day & fitness challenges in cater to surging demand in properties collaboration with HealthifyMe test

Turn the Tide Unlock the new normal Source: Press/ Social media search; Company website; Facebook case study 8 Rise of 'Smart shopper' We expect salience of research and 'smart shopping' to become even more important post the pandemic

Pre-COVID, Indian urban consumers were With more health awareness and more caution around spending, research before trending towards 'smart' shopping shopping will become more critical

Consumers check 85% 2+ data points Coronavirus has made people more Locally produced products may fast become a necessity for retailers and during purchase1 conscious of the journey consumers concerned about products originating from countries where -Inc42 novel coronavirus (COVID-19) has spread Top info checked across categories2 -Nielsen Manuf/Exp Features Manuf. Place Reviews Importance of certain decision criteria will increase Vehicles 48% 30% Gadgets 32% 30% 31% 30% Apparel 31% 37% Food 63% Features Manufacturing place Reviews

Most checked Frequently checked Critical for brands to create a consumer pathway conducive for this 'smart shopper'

Enable ; Seamless to Consumers conduct online research frictionless digital discovery mixed pathways transparent and clear info around allow an involved buying 40% 3 before /during a purchase decision making criteria experience

1. [Avg. # data points consumers checked across all categories answered (except discounts option), Source: BCG - Emerging consumer trends report] 2. [BCG Analysis - Question: While making a purchase in this category last year, what information did you check before/during purchase?, Source: BCG Emerging consumer trends report] 3. Urban Turn the Tide Unlock the new normal consumers – [Source: BCG CCI Digital influence study] Source: Press Search; BCG Analysis 9 Remote way of living

Globally, ~3Bn ~700M daily average monthly actives use active users Social media WHO Health Alert WhatsApp and (MAUs) across Instagram Live service has reached Messenger globally Facebook, views increased ever so 12M+ people via for calling, doubled WhatsApp, more than 60% in a WhatsApp1 since COVID-19 Instagram & week3 outbreak in many Messenger, with important in countries2 2.6Bn MAUs just on Facebook 2 Social Snapchat launched a distancing Dedicated Twitter new AR lens to connect handle for COVID-19 Twitter Snapchat with WHO's 'Covid-19 updates4 Solidarity Response Fund'5

1. Press Search [LiveMint] [Report as on 15 Apr 2020] 2. [Facebook Q1 2020 Earnings Release/ Call Transcript] 3. [Facebook Data - Week ending March 24 vs Week ending March 17]; 4. Press Search [Economic Times] [Government launches dedicated Turn the Tide Twitter handle for COVID-19 updates]; 5. Press Search [HT Media] [Snapchat rolls out AR lens for WHO’s Covid-19 response Unlock the new normal fund] 9 Remote way of living Brands have started leveraging the need for virtual connect in their brand messaging

Brands are centering product messaging Brands are leveraging consumer's need to around WFH socialize virtually

Peter England Budweiser pushing their summer spring collection as organized a 3-day virtual party to engage 'WFH clothing' through brand sites with consumers

Airtel Xstream Shein fiber highlighted consumers can enjoy organized a global streaming event with office-like internet at home in their product celebrities and influencers to support messaging COVID relief

Spotify has centered its communication on Globally, every day 800 Mn+ daily actives Instagram around ''WFH' – asking are engaging with livestreams across consumers how their work desks are workout classes, concerts etc. on Facebook looking like platforms1

1. [Facebook Q1 2020 Earnings Release/ Call Transcript] Turn the Tide Unlock the new normal Source: Press/ Social media search 10 'D'o 'I't 'Y'ourself From Do It For Me to Do It Yourself: Social distancing has triggered a new habit Opportunity for brands to innovate & Consumers have picked up new …Leading to increasing traction engage via moment marketing & user chores / hobbies during lockdown on social media platforms generated content Interest in India (Dec '19-Apr '20)1 100 Allen Solly Launched a campaign for the Mar 19: Janata Curfew kids line, asking consumers to first announced create something with their kids and tag them 50

Borosil Initiated a contest for the Dec 2019 Mar 2020 consumers to cook their How to make How to cook favorite recipe and tag them to win Increasing media coverage on DIY topics Apple Started #TheAtHomeSeries on Instagram promoting consumers to share pictures clicked on IPhone

1. Online Trends Data (India) Turn the Tide Unlock the new normal Source: Press/ social media search; Company website Superior 11 hygiene & clean living a Hygiene is here to stay: Superior practices Stickiness observed new norm getting embedded in consumer DNA in China in the aftermath of the Increased focus on Penetration increasing pandemic5 hygiene every week

% Still buy masks and Interest over time in India1 > 2 lakh users added every week 83 disinfect for storage at +525% home Hand Sanitizers4 100 Janata Curfew 16.3 first announced (New triers % Penetration build up) 13.3

9.5 50 Disinfectant 6.3 Hand wash 4.4 % Turn wearing masks Sanitizer 65 into a daily habit Mar Wk1 Mar Wk2 Mar Wk3 Mar Wk4 Apr Wk1 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Indian Households washing hands more > 1.5 lakh users added every week 91% often now2 Hand Wash4 16.4 (New triers % 14.2 Couldn't purchase a hygiene category that Penetration build up) 17% they were looking for because of emptying 9.5 Pay more attention to shelves3 8.0 76% 5.1 the sterilization and disinfection 41% Bought a new hygiene category3 Mar Wk1 Mar Wk2 Mar Wk3 Mar Wk4 Apr Wk1

1. [BCG Analysis, Source:Online trends data], 2. KANTAR: COVID-19 Barometer India Research Webinar (3rd April); 3. [KANTAR: COVID-19 Barometer India Research Webinar (3rd April) Turn the Tide – World Panel Division]; 4. [KANTAR Report - 10 Slides to Make You Think COVID-19, India – 23rd April 2020 - Urban India Data (March: Week 1, 1st to 7th; Week 2 8th to 14th; Week 3, Unlock the new normal 15th to 21st; Week 4, 22nd to 28th; April: Week 1, 29th to 4th; Week 2, 5th to 11th)] 5. [KANTAR: COVID-19 Impact on Indonesian Attitudes and Behaviours report (14th April)] Superior 11 hygiene & clean living a Brands are responding with category extensions or new norm benefit articulation around hygiene themes

Established brands …while service sector is Innovations in hygiene & are entering into the inculcating hygienic practices sanitization space to cater to hygiene category as key differentiator evolving demand

Marico is foraying into the hand Nippon Paint (Japan) developed sanitizer category with the launch Swiggy introduced 'safety badges' Antivirus Surface Coating to safeguard of sanitizer, as part of it's Mediker for restaurants complying with against viruses from adhering to brand, best known for anti lice highest standards of hygiene (e.g. surfaces shampoos temp. checks, masks, 4 hr sanitation, safe packaging) Baidu developed an open source AI ITC has launched 2 products in model to detect whether individuals in hygiene space – 'Savlon Surface a crowd are wearing masks (97.3% Disinfectant Spray' and a new accuracy) & a non contact infrared hand sanitizer 'Savlon Hexa' temperature monitoring system PVR is planning alternate seating in movie theaters & hygienic practices HUL recently acquired feminine in F&B serving AEON Big, a Malaysian supermarket hygiene brand Vwash from retail chain undertook major Glenmark to expand its portfolio sanitization & cleaning initiatives to in the hygiene segment continue operations during the COVID crisis Indian Railways will likely Cavin Kare is launching hand reintroduce the 5x hike in platform Starbucks China set up safety stations sanitizers under Chic and Nyle ticket prices from pre lockdown in at entrances to do temperature checks brands including sachets and bulk March to deter overcrowding & sanitization – 95% of its stores have packs reopened by March

Turn the Tide Unlock the new normal Source: Press/ social media search; Company website The purchase pathway is undergoing a fundamental change

What will it take for you to win?

Portfolio & Messaging Value Focus Presence & Influence Strengthen Brand Positioning Tweak messaging Digital proliferation and changing

PRE and portfolio focus choice drivers present opportunities to play in targeted, Tap Here and PURCHASE emerging Now : Adjust to the adjacencies opportunity Induce and new normal Incentivize of Channel & Engagement purchase to engagement: deliver value Significantly Delivering targeted, seamless shopping Capture the redesign your experience will be key to win expanding online digital

PURCHASE wallet engagement Win with disproportionate customers share of new online adopters and aggressively retain customers POST Opportunity to retain and develop

PURCHASE brand advocates in the new normal

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

Bringing the Embracing Remote way Rise of Trading Shopping for Strive for Trust in Superior DIY Outside digital of living “Smart down and Utility Health & brand above hygiene & Do It Inside services and shopper” bargain Wellness else clean living: Yourself experiences hunting a new norm

Optimize Relook media mix Create Build Social Connect in Social Distancing Portfolio for model to build personalized 1 engagement @ Engage with consumers in their Value efficiency in creation acquisition scale context 4 5 • Build surround with branded 6 content from creators & • Segmenting • Align to new Moment publishers consumers media marketing • Use in-home creative solutions to drive landscape • Use social differential • Accelerated media for value role of campaigns Focus on Hyper-Localisation • Showcase regional on trending 2 Connect with consumers where value for • Catalogues for themes and they are money: prospecting build • Hyperlocal solutions for discounts, customers in saliency targeting, optimization, lead bundles adjacent management & categories PURCHASE FUNNEL PURCHASE - communication Win consumer trust Bring alive Experiences with digital access 7 3 PRE New product launches, in-person demos Sequential messaging by cohort Interactive & engaging story-telling on • Virtual launches and product demos • safety and wellbeing • Conversational solutions with chat bots for personalized recommendations Turn the Tide Medium Term Short Term Unlock the new normal Delivering targeted, seamless shopping experience will be key to win

Accelerated Bringing the Embracing Trading down adoption of e- Outside digital & bargain com and O2O Inside services & hunting experiences

8 Replicate In-Person experiences, from trials to conversion

Convert trials to sales 11 Create Financial Access • Digital innovations like AR/VR/Filters to solve "touch-and-feel” barrier • Payment / financing options e.g. EMI, Build Online presence spot loans 9 • Segmented Own Platforms and Influencing communication Marketplaces • Direct to Consumer models • Collaborative Performance Ads Partner with online retail partners • Conversational Commerce with Messaging tools

10 Create cohorts for deep customer connect PURCHASE FUNNEL PURCHASE • Micro targeting • Custom audiences to gain scale

Turn the Tide Medium Term Short Term Unlock the new normal Opportunity to retain and develop brand advocates in the new normal

Remote Rise of Trading down & bargain hunting way of living “Smart shopper”

Strengthen CRM solutions 12

• Messaging for post sales communication and other digital CRM tools

Drive Value by repeat purchase and consumer up-trade 13

• Remarket with customized offers for up- trade or repeat purchase • Incentivize social peer recommendation to create post purchase advocacy POST PURCHASE FUNNEL

Turn the Tide Medium Term Short Term Unlock the new normal Accelerated Bringing the Embracing Remote way Rise of Trading down Shopping for Strive for Trust in brand Superior DIY adoption Outside digital of living “Smart and bargain Utility Health & above else hygiene & Do It of e-com and Inside services and shopper” hunting Wellness clean living: a Yourself O2O experiences new norm

1 4 5 6 Build social connect in social distancing Relook Media • Build surround with branded content Optimize Create Mix Model • Use in-home creative solutions Portfolio for Personalized 2 Value creation • Align to new engagement at Focus on hyper localization • Segmenting media scale landscape • Hyperlocal solutions for targeting, consumers to • Moment PRE • Accelerated role optimization, lead management & drive marketing - Use differential of regional 7 social media for PURCHASE communication • Catalogues for 3 value Win Consumer Trust campaigns on Bring alive experiences with digital access • Showcase prospecting trending customers in Sequential messaging by cohort • Virtual launches and product demos value for themes and money adjacent • Interactive & engaging story-telling build saliency • Conversational solutions with chat bots for personalized categories on safety and wellbeing recommendation 8 Replicate In-Person experiences, from trials to 11 conversion Create Financial • Digital innovations like AR/VR/Filters to solve Access "touch-and-feel” barrier 9 • Payment / financing Build Online presence options e.g. • Own Platforms & Influencing EMI, spot PURCHASE Marketplaces via D2C models, loans collaborative performance ads • Segmented & Conversational Commerce communicat- 10 ion Create Cohorts for deep Customer Connect • Micro targeting 12 • Custom audiences to gain scale Strengthen CRM solutions • Messaging for post sales communication and other digital CRM tools 13 POST Drive Value by repeat purchase and consumer up-trade PURCHASE Turn the Tide • Remarket with customized offers Unlock the new normal Medium Term Short Term • Incentivize peer recommendation About the Authors

SHAVEEN GARG VIKASH JAIN NIMISHA JAIN Managing Director and Partner, BCG Managing Director and Partner, BCG Managing Director and Partner, BCG Technology & Digital Expert India Head, TMT Practice Asia Pacific Head, MSP Practice [email protected] [email protected] [email protected]

KANIKA SANGHI WAMIKA MIMANI Partner and Associate Director, BCG Project Leader, BCG India Head, Center for Consumer Insight Core Member, TMT Practice [email protected] [email protected] Turn the Tide Unlock the new normal