RECOVERY PLAN AGENDA LOOKING TOWARDS THE POST COVID-19 FUTURE CHANGES IN CONSUMER BEHAVIOUR CHANGES IN CONSUMER PURCHASES CHANGES IN MEDIA CONSUMPTION LOOKING TOWARDS THE POST COVID-19 FUTURE NOBODY KNOWS WHAT WILL HAPPEN. THERE ARE NO PREVIOUS HEALTH EMERGENCIES OF THIS NATURE AND SCOPE, AND THEREFORE THEIR IMPACT ON THE REAL ECONOMY HAS NOT BEEN HISTORICALLY PROVE GLOBAL ECONOMY HAS SUFFERED, AFTER 3 MONTHS THE PANDEMIC HIT CHINA, THE ACTIVITY IS STARTING TO RESUME Source: PWC / Deloitte Economic evolution in past crises March – May 2003 May – Aug 2015 IN PAST HEALTH CRISES, ACTIVITY GENERALLY Industrial production RESUMES WITHIN TWO Retail MONTHS AFTER THE REDUCTION IN THE Passenger traffic NUMBER OF INFECTIONS Retail No. of newly No. of newly infected infected Source: PWC / Deloitte Recovery after crisis 2008 vs COVID /2019 ECONOMY EXPERTS DO NOT CONSIDER THAT THIS CRISIS HAS A SCOPE AND IMPACT 7 quarters 11 quarters SIMILAR TO THAT OF 2008 1 – 2 quarters 2008 COVID Source: PWC / Deloitte Intermittent social distancing scenarios with current and expanded critical care capacity OTHER EXPERTS FORECAST THAT WE COUD LIVE IN A INTERMITTENT SOCIAL DISTANCE UNTIL 2024 Copyright © 2020, American Association for the Advancement of Science Sector Analysis (% Var. Over Previous Year) HOW RECOVERY LOOKS IN DIFFERENT INDUSTRIES - REVENUE DECLINE VS 2019 Deloitte : PWC / PWC : Source 10 8 6 4 2021 2 OUR REGION WILL 0 COME BACK ON region in -2 3.5 – 7.5% trend -4 -6 GROWTH LEVEL IN GDP -8 2021 -10 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Bosnia and Herzegovina 5.6 -0.8 0.8 0.9 -0.7 2.4 1.1 3.1 3.2 3.1 3.6 2.7 -5 3.5 Bulgaria 6.1 -3.4 0.6 2.4 0.4 0.3 1.9 4 3.8 3.5 3.1 3.4 -4 6 Croatia 1.8 -7.4 -1.5 -0.3 -2.2 -0.5 -0.1 2.4 3.5 3.1 2.7 2.9 -9 4.9 Serbia 5.7 -2.7 0.7 2 -0.7 2.9 -1.6 1.8 3.3 2 4.4 4.2 -3 7.5 Slovenia 3.5 -7.5 1.3 0.9 -2.6 -1 2.8 2.2 3.1 4.8 4.1 2.4 -8 5.4 Bosnia and Herzegovina Bulgaria Croatia Serbia Slovenia Source: IMF 1/3 OF G7 COUNTRIES’ RESIDENTS SAID HOW THEIR PERSONAL INCOMES ARE ALREADY AFFECTED WITH COVID-19 CRISIS Source: PWC / Deloitte Search: Deferred Payment 120 100 IN SERBIA SEARCH FOR 80 TERM ‘DEFERRED PAYMENT’ 60 IS INCREASING 40 20 0 8/18/19 9/18/19 10/18/19 11/18/19 12/18/19 1/18/20 2/18/20 3/18/20 Deffered Payment Source: Google Estimated distribution of disposable income per capita in Spain (%) IN 2021 SOME OF THE CONSUMERS’ PRIORITIES WILL CHANGE. EXAMPLE IS SPANISH SPENDING Precrisis Isolation 2021 Source: IMF 3.1% 8.70% 7.0% 4.5% 14.7% 3.90% 4.9% 6.3% 3.90% 5.1% 4.1% 5.2% IN OUR REGION 5.2% 9% 6.7% 7.8% 5.3% 2.30% 8.3% 4.8% EXPENDITURE ON 4.70% 5.9% 3.2% 4.0% FOOD IS ALREADY 11.4% 9.3% 4.1% 7.1% 7.2% 13.3% 16.7% HIGHER THAN 13.20% 9.7% EUROPEAN 19.9% 16.8% AVERAGE 24% 34.3% PERSONAL EXPENDITURE PERSONAL In Serbia, we spend 18.8% 19.0% 11.0% 3 times more on 2018 EU 2018 Srb 2018 Cro 2018 Bug food FOOD AND DRINK HOUSING TRANSPORT OTHER PERSONAL OBJECTS AND SERVICIESS CLOTHING COMMUNICATIONS RECREATION AND CULTURE ALCOHOLIC DRINKS AND TOBACCO HEALTH EDUCATION RESTAURANTS AND HOTELS HOUSEHOLD EQUIPMENT Source: Eurostat LOOKING CLOSER TO THE CATEGORIES THAT WILL INCREASE IN THE NEW NORMAL SALES INCREASE (+) Food & Beverages Medical / Life Insurance Indulgence Beauty Personal care products Outdoor gym Nutritional support Pharma Online entertainment (e-games, OTTs, Household cleaning streaming…) Food & Beverages Household cleaning Mobility solutions Pharma Toys Online entertainment DURING AFTER COVID-19 COVID-19 Apparel Alcohol OOH Entertainment Appliances OOH Dining Consumer electronics Flights Gym Automotive Beauty Luxury Fuels / oil Tourism Automotive OOH Dining OOH Entertainment Luxury (-) Tourism SALES DECREASE Flights Source: Spotlight Covid-19 IPG Mediabrands *Sales increase & decrease comparing to a normal period, not during the crisis CHANGES IN CONSUMER BEHAVIOR CONSUMER BEHAVIOUR ROADMAP As a result of the pandemic, consumers have adapted to this new environment, emerging new behaviors as a result of confinement. Some of them, will stay in the long term, and we need to seize the opportunities that this new behaviors bring to brands. DURING COVID-19 | CONFINEMENT AFTER COVID- 19 | THE NEW NORMAL I DIGITAL COMMUNITIES II PLAY WITH ME III VIRTUAL LIFE IV DO IT YOURSELF BALCONING HUMOR FIRST​ CONSUMER BEHAVIOUR THAT WON´T CONTINUE AFTER COVID-19 BALCONING The new way to socialize with your community Once the quarantine is over, people will be back to socialize with their regular friends and won´t have the need to interact with their community... Yet, in our region, we have special relationship with neighbors. CONSUMER BEHAVIOUR THAT WON´T CONTINUE AFTER COVID-19 HUMOR FIRST Humor has an exit route We are already seeing a decrease in the number of memes and jokes shared and this will end once the crisis is over. Consumers will look for different approach in the messages. CONSUMER BEHAVIOUR THAT WILL BE PART OF THE NEW NORMAL I DIGITAL COMMUNITIES Digital connections are more important than ever When we go back to normal, we will not stop getting physically together for important things or celebrations... but many social relationships can become much more digital and remote or simply we´ll do them at home with a reduce group of friends. CONSUMER BEHAVIOUR THAT WILL BE PART OF THE NEW NORMAL II PLAY WITH ME The e-games communities grew during the confinement specially in the e-sports category. In the new normal, we´ll se a drop in the hours of time spent on videogames (people will have other responsibilities to attend) but the number of users will continue growing and this will be an important opportunity for brands. E-GAMING STARTS TO CHANGE SPORT AS WELL AS OTHER SOCIAL ACTIVITIES Sports viewers worldwide, by League 2018 NHL 65 MLB 114 ESPORTS 167 Millions Millions $ NBA 231 NFL 270 0 50 100 150 200 250 300 IT’S PLACE OF GATHERING FOR MANY GENERATIONS. OUR REGION IS FOLLOWING THR TREND 47% 21% 26% 27% 26% 22% 24% 24% 22% 16% 20% 19% 15% WAVE X: Took part in online multi-player game in last 24 hours, 16-54 CONSUMER BEHAVIOUR THAT WILL BE PART OF THE NEW NORMAL III VIRTUAL LIFE Leisure brought to online world The Louvre Virtual tours, livestreams, have become popular ways of allowing Solomon R. Guggenheim Museum people to still experience leisure. Van Gogh Museum Getty Museum.... After the isolation period, we´ll Novembar Galerija... see how this digital experiences will be more important than ever. The streaming and immersive technology will play a vital role. CONSUMER BEHAVIOUR THAT WILL BE PART OF THE NEW NORMAL IV DIY Unleash the creativity of consumers With many businesses closing during the quarantine, services that were typically outsourced are left to consumers to find alternative solutions. People have find out how creative and resourceful they can be at home, and although they´ll go out to do some of these activities, they´ll complement them with the ones at home. DURING COVID-19 | CONFINEMENT AFTER COVID- 19 | THE NEW NORMAL IMPLICATIONS & OPPORTUNITIES FOR BRANDS When the quarantine is over, the new normal will adapt some of the behaviors that we´ve see through this period and incorporate them into their routines. DIGITAL PLAY WITH VIRTUAL DO IT COMMUNITIES ME LIFE YOURSELF Deliver something that makes the Bring together friends & special Capitalize new leisure moments Boost creativity to allow audience’s experience better than consumption moments at home at home. consumers go one step further it would have been without your around brand products. in their DYI activities. brand’s involvement. Partner with other institutions Create virtual-based revenue to sponsor experiences & Offer packs & promotions to Add value doing something that streams such as app-based activities. ease this activities. benefit the “space” not just the services. brand. Use streaming and immersive Content and tutorials to help Use the new channels as a new technologies to create consumers develop their DIY Understanding your audience’s touch points where consumers meaningful experiences with activities. motivations and identify how you interact in their digital consumers. can actively enhance their communities. enjoyment. CHANGES IN CONSUMER PURCHASES CONSUMER PURCHASE ROADMAP Due to the health crisis, consumers have adapted the way they shop and have changed their priorities. Once the pandemic is over, they will maintain some of this habits and boost other to help them go through the “new normal”, where health and security are the main drivers. DURING COVID-19 | CONFINEMENT AFTER COVID- 19 | THE NEW NORMAL STOCKPILING INDULGENCE I ONLINE SHOPPING II PROXIMITY, CONVENIENCE & VALUE FOR MONEY III TRUSTED BRANDS TRY NEW PRODUCTS DEVICES FOR HOME ACTIVITIES IV HEALTHY PRODUCTS / EXPERIENCES V SANITATION / PREVENTION / PRODUCT SECURITY VI ENVIRONMENT FRIENDLY DURING THE CONFINEMENT, CONSUMERS EXPERIENCED TWO PURCHASE PHASES THAT WON´T CONTINUE AFTER COVID-19 STOCKPILING INDULGENCE After some first purchases more The Coronavirus crisis has motivated by fear, now citizens prompted consumers to make have accepted and de-dramatized "Panic Purchases". this fact and we are beginning to manage their consumption more The first weeks of the rationally and they increased the confinement, people increased purchase of indulgence products.