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Turn t he TideUnlock the new consumerpath to purchaseMAY 2020
The new normalhas transformed thepurchase pathwayBusinesses must unlockthe new normal to helprevivalTurnTideTurnthethe TideUnlockthethe newnew normalUnlocknormalCopyright 2020 by Boston Consulting Group. All rights reserved.Consumer behavior hasfundamentally changed
Great [leaders] rejoice in adversity just asbrave soldiers triumph in war—Lucius Annaeus SenecaCovid-19 is anunprecedentedepidemicHowever to win inadversity,companies needto tailor strategiesto today’s uniquecontext and lookthrough layersFacebook companyTurnTideTurnthethe TideUnlockthethe newnew normalUnlocknormal
While the pandemic is far from over, signs of recovery arestarting to showPandemic spread in different degrees across the globeSpread of disease starting to slow down in IndiaAs of 21 May 2020 4.9M188Confirmed cases globally1Countries with cases18.6Doublingrate2Declinedays13.2daysApril 21May 17As of 29 April 2020Days of doubling cases6UK0-3 daysUSAFranceSpainItalyIran3-6 daysChinaIndiaJapanSouthKorea6-14 days170No. of red zones314-30 daysDeclineApril 15130May 01 30 days 0.1M 45K 64KTotal no. of cases1Recovered1Active115%4Increase 40%5Recovery RateApril 19Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards and hence imperfect measures1. [ 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: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 inIndia: 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]May 20Turn the TideUnlock the new normal
The pandemic impacts the health and socio-economicfabric; lives of consumers will not be the sameThe pandemic has created anever-before focus on health &safetyCOVID-19 Cases0.1M total cases in India12Web Trends 120% spike in online searches on health4 Public Health& immunity in India post COVID2IndustryGuidelines12 industries4 got relaxation inIncome Uncertainty 60% of total household expenditure in hotspots;45% of consumption in hotspots non-essential6 198M workforce employed in hotspot districts78restrictions3Demand of health products49% consumers intend to buy morevitamins, herbs and supplements in thecoming days369MonetaryRelief Measures 13Bn infusion by monetary reliefmeasures by RBI510SOCIAL117MeasuresSocial distancing enforced vianation-wide lockdown5Consumer priorities beingre-calibrated; certain behaviorchanges will stick long termECONOMICALPUBLIC POLICYHEALTH & SAFETY1Uncertainty around income andweakened demand potential innear termSocial distancing and structuralinterventions will drive fasterrecoveryInflation / Price Indicators8 70 bps drop in CPI 130 bps drop in WPITrade / Logistics Indicators9: 35% decline in exports and29% decline in imports 14% decline in retail freight trafficIndicators10:Market Sentiment20% decline in Nifty index since 1st Feb121314Consumer Sentiment8 of 16 categories expected to seereduced spends in next 6 months11Web Traffic trendsMedicine and Beverages with highest trafficgrowth12Media, Smartphone UsageGlobally, 3Bn average MAUs acrossFacebook, WhatsApp, Instagram &Messenger13; 12.5% increase insmartphone screen time (April vs PreCOVID)14Mobility40% reduction in number of visits topublic places due to lockdown and socialdistancing15Source: 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.[BCGAnalysis, 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 April2020] 15. [Source: COVID-19 Community Mobility Report – India – Apr 17, 2020]Turn the TideUnlock the new normal
Social distancing has been the key to fight disease globallyand in India – making it the new way of livingSocial distancing advocated as key measure tocontrol COVID spreadIndia is actively following social distancingguidelinesIndia has observed a stark drop in number of visitsacross public placesCDCWORKPLACERETAIL & RECREATIONJohns HopkinsUniversity 85%2South KoreaSouth Korea keeps social distancing post-qz.comCOVID-19Hong KongHong Kong extends social distancing-Bloombergmeasures as cases dropGlobally strict measures followed to ensure social distancingUp to 15 April 202010 CountriesClosed publictransportation119 Closedworkplaces1Reduction in numberof visits compared tobaseline 65%2Reduction in numberof visits compared tobaselineStrict social distancing guidelines issued for reopening workplaces3Non-ExhaustiveSeating at least6 feet awayfrom others onjob sitesCountries1. [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; [Live Mint] [Coronavirus lockdown rules for offices: 6 feet apart seats, one hour gap between shifts]Gap of 1 hr.between shifts &stagger lunchbreaksTurn the TideUnlock the new normal
Even in the face of adversity, there are some companieswho pro-actively find opportunities to grow18% of Indian companies1 improved both growth & marginduring the 2008-09 Global Financial Crisis, while 37%declined in both2AMERICANEXPRESSIncreasing sales growthAmerican Express was severely threatened in the 2008 financialcrisis by rising default rates and falling consumer demand. Thecompany pivoted on new partnerships and embraced digitaltechnology. Its stock price has risen by 1,000% in the decadesince3A21%ShrinkingEBIT margin18%ExpandingEBIT marginB37%24%Globally too, there are success stories of companiesweathering historical crisisUniqlo – a retail brand in Japan – grew from 5% to 30% marketshare in 2 years of downturn (1999-2000) while growing margins –by pivoting their business model towards the white space ofconsumer need created by the crisis4UNIQLOFalling sales growth1. [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 tothree-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, Analystreports, Annual Reports]Turn the TideUnlock the new normal
As the current crisis unfolds in India, near term potentialexists in pockets – need to look at the de-averaged pictureMore than 22 states have less than 20% cases1Very High : 10% ofpan India cases80%casesJammu andKashmir (407)High : 3%, 10% ofpan India casesLadakh (18)Med : 3% of panIndia casesHimachal Pradesh (40)Uttarakhand (46)Punjab (277)Chandigarh (27)Delhi (2248)Rajasthan(1890)UttarPradesh(1509)No casesAssam (35)Manipur (2)Mizoram (1)Telangana (960)Goa(7)Karnataka(443)73%11%Rural sub-districtsMetro and Tier 1 Cities% population in non-hotspot or noninfected districts2Non - infected districtsNon - hotspot districtsHotspot deshBiharCompanies should strategically prioritize reopening and scaling up business as lockdownstarts easing across regionsAndhra Pradesh (895)Potential to target specific- micro-marketsfurther along recovery to 'normal'Pondicherry (7)Kerala(438)45Non-ExhaustiveArunachal Pradesh hand(2)Madhya Pradesh(49)(1695) Chhattisgarh(36)OdishaWest ict classification as per MoHFW guidelines on 15 Apr 218Population (Millions)3Data as of 23 AprAvenues may lie in different pocketsTamil Nadu (1629)Andamanand Nicobar Islands (18)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 compiledin 2017-18)]; 3.[BCG Analysis, Source: Nielsen-Indicus database 2017-18, BCG Center for Consumer Insight, Press reports (Data compiled in 2017-18)]Turn the TideUnlock the new normal
Spending sentiment translating differently acrosscategories; marketers need to react accordinglyRight strategic actions needed to win disproportionate share“Growing” CategoriesCategories with net increase in spendsMarketers will need to identify pockets of opportunitiesWave 1Wave 2Wave 323-26th Mar17-20th Apr30 Apr-03th May'Shrinking' CategoriesCategories with net decrease in spendsStaplesTravelHousehold care productsOOHEntertainmentUtilities (electricity, water)RestaurantsMovies at cinema hallHome wifi connectionCosmetics, makeup, perfumePaid OTT subscriptionDiscretionaryspendsDTH servicesApparel/fashionTobacco & smoking suppliesAlcoholFood deliverySavingsSports equipment & clothingInsuranceElectronicsNon-mobile consumer electronicsMobile electronicsHome construction/renovationsVitamins, herbs, supplementsHomeMedical proceduresHome furnishings and décorScooters/bikesFirst-aidEducationPublic transportLuxury brands/productsPreventive diagnostics/testHealthBusiness travelMobile servicesToys & gamesSaving/InvestmentsWave 330 Apr-03th MaySpas, theme parks, concertsPersonal care productsAt-homeentertainmentWave 217-20th AprVacation/leisure travelFresh foodsDaily essentialsWave 123-26th MarAutoEducationCarsPackaged food & beverageConsumer sentimentPositiveNeutralNegativeNote: 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 2Box (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.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)Turn the TideUnlock the new normal
Overall older & higher SEC consumers haverelatively positive outlookAmidst the growingincome uncertainty,opportunity toidentify and sharplytarget least impactedmicro-segments1. Question text: “How do you expect your overall available household income to change in the Next 6months as compared to before lockdown?". Note: Self-employed includes professions like doctors, CAs, yogainstructors, 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 includesbusinesses with 10 employees and shop owners; Source: BCG COVID-19 Consumer Sentiment Survey April30-May 03 2020 (N 1,327)Spends2Income1% expecting lowerincome in the next 6months52% expecting higherincome in the next 6months226014611452235121% expecting decrease in % expecting increasetotal spends in next 6 in total spends in nextmonths 6 monthsSEC ASEC B18-25 yrs.26-35 yrs.36-45 yrs.42474834242841344134Turn the TideUnlock the new normal
Turn the TideUnlock the new normalCopyright 2020 by Boston Consulting Group. All rights reserved.The mostfundamentalchange from thiscrisis is thechange inconsumerbehavior
Our research points to fundamental themesimpacting consumer behaviorSOCIAL DISTANCING:The new normal 85%Retail &recreationReduction in number ofvisits to public placescompared to baseline1HEALTH AND HYGIENE:Top of the mindINCOME UNCERTAINTY:Here and now concern49%54%Consumers intend to buymore vitamins, herbs andsupplements in thecoming times2Consumers expect overallhousehold income toreduce in the next 6months31. . [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 yourspend 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 theNext 6 months as compared to before lockdown?"[BCG COVID-19 Consumer Sentiment Survey 30-May 03 2020 (N 1,327)]Turn the TideUnlock the new normal
These themes will create different types of changes inconsumer behavior – some more long lasting than othersREVERSAL OF PASTTRENDSACCELERATION OF EXISTINGTRENDSNEW HABITSWild cards; likely to betemporary surgesHigh potentialpermanent shifts in behaviorStickiness of change isyet to be determinedThese are complete reversal of howconsumers were behaving in the pastConsumer behavior was already movingtowards these trendsEntirely new habits developed during thepandemic and while social distancingThese changes have mostly risen out of aconstraint or fear vs. convenience or choiceWith the pandemic, the trends havegained momentum and acceleratedConsumers who gain positive reinforcement outof the habits may retain themThese trends will likely last in line withrecovery periodPositive reinforcement is essential for consumersto adopt them in the long termEcosystem facilitating and feeding these changescan make it last longerTurn the TideUnlock the new normal
11 trends of consumer behavior emergeThis will deeply impact purchase pathways in the new normalREVERSAL OF PASTTRENDS1Bringing theOutside InsideSocialDistancingHealth &HygieneIncomeUncertainty2Trust in brandabove all else3Trading down &bargain hunting4ACCELERATION OFEXISTING TRENDS5Embracing digitalservices & experiencesNEWHABITS9Remote way of living6Accelerated adoption ofe-commerce and O2O107Strive for Health &Wellness118'D'o 'I't 'Y'ourselfSuperior hygiene &clean living: a new normRise of 'Smart shopper'Shopping for UtilityWild cards: likely to be temporarysurges in line with recovery periodHigh potential permanent shifts:linked to positive reinforcementStickiness of change is yet to bedeterminedTurn the TideUnlock the new normal
11 trends of consumer behavior emergeThis will deeply impact purchase pathways in the new normalREVERSAL OF PASTTRENDS1SocialDistancingBringing theOutside Inside79% consumers are not goingout of house, except work163% consumers are payingHealth &HygieneIncomeUncertaintyACCELERATION OFEXISTING TRENDS 51% consumers saw567more attention to origin ofproduct2an increase inpayment via digital9wallets41050%Accelerated adoptionofof all consumers expecte-commerce and O2Oto increase e-'D'o 'I't 'Y'ourselfStrive for Health &WellnessSuperior hygiene &91% Indianclean living: a new normhouseholdscommerce spend innext 1 month 5 1140 % may increaseTrading down &bargain huntingdecrease in overall spend in next 6months3Shopping for UtilityPurchase triggers expected tobecome more "functional"Spike in newhobbies andhabitswashing handsmore often7spend on Health &Wellness83Wild cards: likely to be temporarysurges in line with recovery periodin InstagramLive views in aweek6Remote way of livingTrust in brandabove all else460% increaseEmbracing digitalservices & experiences28NEWHABITSRise of 'Smart shopper'43% consumers are expectingInformed purchasedecision; High salienceof digital researchHigh potential permanent shifts:linked to positive reinforcementStickiness of change is yet to bedetermined1. 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 Researchreport – 3rd 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)]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. [FacebookIndia 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)]Turn the TideUnlock the new normal
Bringing theOutside Inside1With social distancing, indoor is becoming the newoutdoorPre-COVID, consumers showed inclination towardsexperiencesOutdoor movement will likely continue to be restricted;consumers trying alternatives377% consumers indulged in experiences161Travel49% respondents who did theexperience last year33Entertainment Indulgence29ImmediatelyafterWithin a fewweeksWithin a fewmonthsIn 1 year ormoreNeverMovies in theatre12%31%38%14%5%Eating h lockdown, consumers are being forced to stayindoors2Trying to avoidpublic places85%Keeping a distancein crowds87%Not going out of house,except work79%RETAIL &RECREATION'Old hobbies becomesurvival mantra for manyduring lockdown' - TOIWORKSOCIALIZEWorking from home4'Social Bonding inPhysical Distancing' Indian Express79%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 oncethe 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 wouldreturn 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 nowinstead of going to office/ work place [BCG COVID-19 Consumer Sentiment Survey April 30-May 03 2020 ( N 1,327)];Source: Press SearchTurn the TideUnlock the new normal
Bringing theOutsideInside1Opportunity for brands to customize offerings andcommunication for in-home consumptionIn India, the ‘Stay Home’ &‘Ghar Pe Raho’ sticker was used over1Brands adapting campaign messagingaround 'Stay at home'Telecom playersused Facebook todrive awareness forstaying safe at homeand promotingonline transactionsfor recharge at homeSource: Facebook case studies; 1. Facebook Internal Data2Brands offering interesting things to dowhile ‘Stay at home’Zee5 Global launchedthe 'stay home, stayentertained'campaign andleveraged Facebookto scale theirsubscriptionprogram, catering toentertainmentseeking consumers inlockdown6Mtimes onInstagram13Brands delivering outdoor services insideyour homesSBI launched#GharSeBankingcampaign on Facebook tomaximize the adoption ofdigital banking productsin the wake of the countrywide lockdownTurn the TideUnlock the new normal
Trust in brandabove
Uniqlo – a retail brand in Japan – grew from 5% to 30% market share in 2 years of downturn (1999-2000) while growing margins – by . pivoting their business model towards the white space of consumer . need created by the crisis. 4. 18% of Indian companies. 1. improved both growth & mar
