BCG Perspectives
Facts, scenarios, and actions for leaders
Publication #7 with a focus on
Sensing consumer behavior and seizing demand shifts
Version: 26 May 2020

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26
May2020
2020Version
Version5.1.
7.1.
8 May

COVID-19

COVID-19

BCG Perspectives

COVID-19 is a global
societal crisis

Leaders need to drive an integrated
response to navigate the crisis

We at BCG believe that the COVID-19 outbreak isfirst and foremost a societal crisis, threatening
lives and the wellbeing of our global community.
Society now, more than ever, needs to collaborate
to protect people's lives and health, manage midterm implications, and search for lasting solutions.

It is the duty of health, political, societal, and businessleaders to navigate through this crisis. A complex
interplay of epidemic progression, medical response,
government action, sector impact, and company
action is playing out. This document intends to help
leaders find answers and shape opinions to navigate
the crisis in their own environments. It encourages
thinking across the multiple time horizons over which
we see the crisis manifesting itself.

Source: BCG

1

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Objectives of this document

COVID-19 will be a journey with three distinct phases, requiring
an integrated perspective
Fight

FutureTypically the initial phase after a pandemic
outbreak–goal is to urgently limit numberof new cases, especially critical care

Finding paths to collectively fight the virus,
restart the economy, and support society inbalancing lives and livelihood

Disease controlled through vaccine/cure/herd immunity, and treatment withinsustainable medical capacities possible

Social distancing (lockdown) and partial businessclosures lead to economic recession with large
employment impact

Increasing economic activity with recovering
GDP, some business reopenings, and social
distancing on sustainable level

Reactivated economy with strong businessrebound and job growth, social restrictions
limited or completely suspended

1. Disease progression, health care system capacity, and response
2. Government policies and economic stimulus
3. Economic scenarios
4. Business engagement and response
5. Public engagement and response

All of the above five factors result in specific economic and social outcomes in each phase
Source: BCG

2

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Flatten

NAVIGATING BUSINESSESTHROUGH THE CRISIS

Establish crisis
management

9

action areas
for businessleaders
Navigatethrough
Flatten, Fight,
and Future

Fight

Scenario-Based
1 Develop
Planning Approach to

Futurea Rapid Response
2 Createand Transformation(RR&T) teammanage uncertainty

3

Revamp organization for
the New Reality

6

Restructure Cost,
manage Cash & Liquidity

4

Sensing Consumer Behavior
and seizing Demand Shifts

7

Emerge Stronger, drive
advantage in adversity

5

Stabilize and restart Supply
Chain, Manufacturing

8

Accelerate Digital andTechnology transformation

9

Help Society during
COVID-19

Note: RR&T = Rapid Response and Transformation Team
Source: BCG

Focus
of this edition

3

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

FlattenExecutive Summary | COVID-19 BCG Perspectives
To protect and grow topline through the crisis, it is critical for companies to rapidly sense consumer behavior and seize resulting demand shifts
COVID-19 drives changes in consumer behavior; leaders should understand de-averaged perspectives on geographies, sectors, channels, and target groups
Two imperatives emerge for protecting and growing B2C and B2B top line: building deep sensing capabilities ("Lighthouse") and extending brand relevance and reach
Build "Lighthouse" by leveraging high frequency data to sense short-term and structural demand shifts; key asset in a world that sees amplified speed of change
Extend brand relevance and reach by purposefully aligning to new shape of demand; reinvent offering and channel mix, supercharge marketing, and personalize value
Leaders augment organization capabilities in advanced analytics, scalable tech architecture, digital experiences, and innovation to win in the new reality

Across countries, efforts to flatten the curve and ramp-up testing continue; the impact on economy, businesses, and consumer sentiment persists
•
•
•
•
•
•

Globally, 2.1 million patients have recovered from COVID-19 and the case-doubling rate has improved to 35 days
As countries move into the 'Fight' phase, several have started to see a decline in daily cases; while some emerging economies continue to see an increase
Testing landscape is changing rapidly, molecular testing continues as “gold standard;” continued efforts to improve test/case ratio
Economic forecasts deteriorating for US and Europe; rebound of global GDP not expected before 2021
Total Shareholder Return still not back to pre-crises level for any sector across regions; 11 sectors have >10% of companies with high probability of default
Consumers increasingly display less pessimistic outlook than four weeks ago; have started stepping out for work and essentials (with easing of lockdowns)

We believe during
this crisis leadersneed to think along
two dimensions:

Source: BCG

1Taking an integrated perspective on
health/medical progression,
governmental responses, societal
reactions, and economic implications
to understand business/sector impacts

2

Thinking multitimescale in a FlattenFight-Future logic

4

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

•
•
•
•
•

1

Guide for leaders
How companies can adapt and transform to win

2

Updated epidemic progression and impact
Epidemic progression and virus monitoring
Economic and business impact
Consumer sentiment snapshot

5

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Sensing consumer behavior and seizing demand shifts

COVID-19: Impact dashboard
As of 22 May 2020

Economic Impact

5.2M

2.1M

338K

GDP forecasts [%]# of cases# of recoveries# of fatalities

2020# of days of casedoubling1# of reported recoveries
as % of total cases

08 May22 May

21

29

35

US

39%

Japan

28%

34%

# of countries with
1k+ cases

83

90

104

# of tests / case2

10

12

15

13k

22K

34K

# of tests / million2

-5.9%
-5.2%

8 10

20 Mar vs 21 Feb -31%

-30%

-34%

-10%

22 May vs 21 Feb -11%

-19%

-18%

-7%

S&P500

FTSE100DAX

CHN SSE

0.7%

Total Shareholder Returns11
6.0%

First column: 21 Feb to 20 Mar; Second column: 21 Feb to 15 May

1.9% 5.8%

India

Stock market performance11

2.0%

1.2%

China

Banks

Estimated current employment impact9% of employees
Total employment
Employees
impacted
2019 (M)
impacted10 (M)Americas

EuropeAsia

Pharma-19% -2%-20% -9%-22% -2%

F&B12-26% -15%-24% -14%-12% -3%

Telecom-17% -14%-20% -19%-14% -12%

Software-30% -8%-32% -14%-28% -15%

US

~159

~39

~24%

Retailing-42% -15%-36% -23%-24% 4%

UK

~33

~8

~25%

Capital goods -38% -22%

-35% -24%-29% -14%

Germany

~45

~10

~23%

Auto

-47% -24%-45% -27%-32% -20%

50

France

~28

~13

~46%

Real Estate-42% -34%-26% -37%-22% -20%

6-24

Italy

~23

~7

~30%

Energy-56% -37%-45% -32%-41% -30%

Spain

~20

~4

~20%

Banks

-41% -35%-44% -47%-26% -21%

VaccineTreatment

Trials in pre-clinicalstage and beyond3

139

122

Trials in Phase 1 andbeyond47

Current est. timeline
for approval & scale-up

12-36

months5

IMF-10 -8 -6 -4 -2 0 2 4 6-7.5%7
Baseline 1.3%8

Europe24 AprBusiness Impact

months6

1. No. of doubling days based on 7 day CAGR 2. Median of values for top 15 countries by nominal GDP (except China) 3. Ongoing trials including pre-clinical, Phase 1 (first trial in humans), Phase 2, Phase 3, Phase 4 4. Ongoing trials including Phase 1(first trial in humans), Phase 2, Phase 3, Phase 4 5. 12 monthdevelopment "best case", then likely to require time to scale across population 6. Remdesivir is approved now, could be more widely available by Jul '20. For the next wave, estimated timeline is Oct '20 – April '22 (6-24 months). If first round of drugs being tested succeeds – then 6-9 months; if not – substantially longer 7. IMF
April 2020 forecast; YoY forecasts; Range from forecasts (where available) of International Monetary Fond, JP Morgan Chase; Morgan Stanley; Bank of America; Fitch Solutions; Credit Suisse; Danske Bank; ING Group; HSBC; As of reports dated 12 April 2020 to 12 May 2020 8. IMF January 2020 forecast 9. Available data as of
May 15; figures are changing rapidly and often being reported with a lag from the current date 10. Includes increase in unemployment and employees covered by government's wage support programs 11. Performance is tracked for two periods, first from 21 February 2020 (before international acceleration of outbreak) to 20
March 2020 (trough of the market) and from 21 February 2020 through 22 May 2020 12. Food & Beverage. Source: WHO, World Bank, JHU CSSE, Our World in Data, IMF, Bloomberg, BCG, Eurostat (Europe), Trading Economics (US); Gov't Wage Support figures & comments: UK Government 5/12 & Trading Economics (UK),Reuters.com 4/30 & FitchRatings 5/18 (Italy), U.S. Department of Labor 5/21 (US), Ministerio de Trabajo 5/21 & Reuters 5/5 (Spain), Ministere du Travail 5/20 & Trading Economics (France), Arbeitsagentur 4/30 (Germany)

6

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Epidemic Progression

COVID-19 drives changes in consumer behavior; de-averaged perspective
required, but four key trends observed
Change in consumer behavior is not uniform

Large shifts in spend
categories

Significant turnto online channels

Fewer transactions
with higher value

Increased trust in
brands with purpose

36% consumers trading up/down on
prodcuts1, 60% of companies increasespend on IT/digital2~20% web-traffic increase observed
for retail categories vs. ~60% drop
in footfalls3

Groceries have seen a 30%+
increase in transaction value formonth of April vs. pre-crisis4

35%+ net likelihood of buying frombrands that have positively stoodout during the crisis5

1. BCG-COVID-19 Consumer Sentiment Survey, April 24-27, 2020 (N = 2783 across US; unweighted) 2. DSR Digital Transformation Survey 2020 (n=217, as of April 30, 2020) 3. For Germany, Italy, US as of April
26, 2020; categories include consumer goods and retail, beauty and cosmetics, beverages, consumer electronics, fashion and apparel, jewelry and luxury products, furniture, restaurants and delivery, and home andgarden 4. Spend data is based on consumer credit card/debit card/checking account activity from a panel of US consumers from Earnest Research (tracked responses exclude cash/other), May 6, 2020 5. BCGCOVID-19 Consumer Sentiment Survey, April 17-20, 2020 (N = 5728 across US, UK, Germany, Italy and China; unweighted) Source: BCG Marketing, Sales, and Pricing, BCG GAMMA, Earnest Research,
Bloomberg, BCG

7

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

De-averaged perspective required across geographies, sectors, sales channels, target groups, etc.

Embedding deep sensing capabilities, and extending brand relevance and reachare key priorities for leaders

Develop rapid demand sensing
capability ("Lighthouse")A

In some cases, fully rebuilding demand models
and forecasts may be essential

Fight

FutureB

Extend brand relevance and reach

01 Clarify and amplify brand purpose

01 Leverage high-frequency data

02 Align to new shape of demand

02

03 Reinvent your offering

De-average demand patterns

04 Reimagine omni-channel
05 Supercharge precision advertising
06 Personalize and de-average value
Source: BCG

8

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

FlattenPace and de-averaged nature of change make rapid sensing
capabilities a key imperative

Imperative to build rapid demandsensing capabilities

The pace of change has increased by multiples
We have seen two years' worth ofdigital transformation in two months– Satya Nadella, CEO of Microsoft

Change in consumer behavior is not uniform
Geography

Short-term sensing

Medium-term scenarios

Sensing short-term trends
in demand based onhigh-frequency data

Understanding scenarios
for changing shape ofdemand and structural shifts

SectorSales channel

Target group…

Source: Microsoft; BCG

9

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Change is coming at fast pace and indifferent shapesAA real time 'Lighthouse' to navigate uncertainty

Leverage highfrequency data

Internal

How do we operate ina world where pace ofchange has increasedby multiples?

External

Products and customers
Order intake
Sales
Production
Inventory
Promotional activity

Epidemiological models
Macroeconomic and government
Consumer Activity Index™
Customer spend
Consumer sentiment
Footfall, search, social trends

Real-time data cockpit
Current selection: Italy
0

1

5.0

Insight on current
demand changes

Estimated Past range

Example

0.0
-2.5

Italy

Predicted Future range
Mar

Apr

May

Jun

Jul ‘20…web traffic analysis
predicts near-term actions

Change in footfall (indexed, in %)100

Residential

0

Workplaces

-100
Mar

Apr

May ‘20 Transit
RetailSource: BCG Lighthouse…customer spend analysis
offers retrospective

Effective reproduction number

2.5

Spain

Fully rebuilding pastmodels and analyses

Outlook on future
demand changes..consumer sentiment
analysis signals persistence
10

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Data

A.1

SectorSales channel

Target group• Countries/states
operate on different
timelines• Regional/local
authorities decide
reopening• Not all industries
are hit in the sameway
• Dependency on
global supply chain
is critical• E-commercebooming during“Flatten”• Brick and mortar
stores require
reimagination• Spend differs bycustomergeneration• Gen X more stable,
millennials
diverging…

As of April 2020

Example | US Consumer Activity Index (CAI) can help prioritize business decisions
Single metric available by geography(down to the county or market level)
Improved

Decision basis for optimizing marketing/advertising spend by region
100

Increase spend

85

Clark County$130K (CAI 68)

82.5

King County$350K (CAI 54)80

50

Lincoln County$490K (CAI 21)

77.5
75
Decreased
Source: BCG Consumer Activity Index; BCG

Indicative

Washington County$600K (CAI 51)
Wayne County$765K (CAI 32)
Nye County$490K (CAI 45)

Hold spend

00Decrease spend
Madison County$700K (CAI 75)

Reallocate spend
250

500

750

1,000

Advertising spend ($K)
11

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

How do we deal withwide range of change
in consumer behavior?

Geography

CAI

De-average
demand patterns

To gain deep insight into consumer behavior, de-average across multiple factors

CAI

A.2

Extendbrand
relevanceand reach123Clarify and amplify
brand purpose

Align to new shape ofdemandReinvent youroffering

Clarify your reason for being andconnect it to changing needs

Discern short- and long-term
shifts in customer demand

Redefine your offering to service
the new reality

Create sustained advantage bytaking bold and tangible actions

Capitalize on opportunities byplacing the right bets

Pivot to new products, services totarget changed customer demand

4

5

6

Reimagineomnichannel

Supercharge
precision advertising

Personalize andde-average value

Invest to be where yourcustomers are

Pinpoint and capitalize on
pockets of high ROI

Provide a consistent, customercentric approach across channels

Implement targeted advertising
spend to gain share

Reset price and promotion
strategies to deliver value acrosssegments
Create guardrails for short-term
incentives that protect lifetime value
12

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B

Key priorities for extending brand relevance and reachConnection
PART 1

Our uniqueand authentic
strengths

PURPOSEThe needs
URPOof theP worldSE
we serve

1

Lean into purpose and values
internally and externally2

Take tangible, bold, andrelevant actions

3

Create emotional connection
through authentic messages

4

Expand avenues for CEOs to
speak directly to customers

5

Bolster 'social license tooperate' on societal factors

Exploration
Sustainability

Health and wellness
Safety and security

Example | B2C airline leans into commitment to uplifting service
Before COVID-19, purpose-driven business withmission to lift the world

During the crisis, reinforces purpose by:• Empowered agents to give consumers flexibility• Extending statuses and benefits for a full year

• Established profit-sharing airline partnerships• Offered the same benefits to all employees

Source: BCG BrightHouse; BCG Case Experience• Offering free flights for medical personnel• Waiving fee changes and lengthening ticket
expiration dates for passengers

13

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

How can we
authenticallyreinforce and live
our brand purpose
during this crisis?

Community…and create
sustained advantage
DifferentiatedClarify andamplifybrand purpose

Focus on how your brand can take a leadin evolving societal needs…

Table stakes

B.1

Align to new shapeof demand
How can we capitalize
on temporary changes
in demand and plan
for long-term
structural shifts?

Capitalize on opportunities opened
up by new shape of demand

ExamplesExamplesStrengthened drivers of choiceCasualization of apparel

Emergence of new sales opportunities
Auto purchases as concern about alternatives rises

Increasing 'table stakes'
Sanitation and hygiene expectations

Improved accessibility through leveraging digital
Virtual workout classes compared to gyms and fitness studios

Pivots in lifestyles & habits
Cooking dinner at homeExpanded ways of customer engagement
Live-streaming via social media with integrated commerce

Major shifts in supply
Disruption in retail landscape

New white space and innovation opportunities
Tech-enabled shopping leveraging AR/VR

Example | B2C fitness platform pivots from physical studios to digital classes

30k

90%

500+

2k+

11%

Partners across
30 countries

Partners closed
indefinitely due to crisis

Studios that haveadded live classes

Pre-recorded audio
and video workouts

Increase in monthly
active users(vs. -1% last year)1

1. 3-month CMGR January 2020 to March 2020 vs. 3-month CMGR January 2019 to March 2019
Source: CNN Business; App Annie; BCG Consumer Sentiment Research; BCG Case Experience

14

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B.2

Identify evolving demand
spaces and customer needs

Crisis creates opportunity for innovation and imagination

Reinvent
your offering

COVID-19

How do crises create
an opportunity forreimagining?
FoundedReimagined

Invented/
Developed

Dotcom /SARS

Great Depression• Airplane
manufacturer• Auto maker• Rental car co.

• Health care co.
• Tire manufacturer• Insurance co.

• Auto company
made aerospaceengines• Auto company
made tractors• Soap company spon- • Chemical company
sored soap operas
made synthetics• Bank entered retail • Airplane manubrokeragefacturer made• Electricity company pressurized aircraft
offered appliancefinancing• Airline diversified• Car manufacturer
improved fuelefficiency• Wholesalemarketplacelaunched B2C
ecommerce• Online retailer
expandedmarketplace• Sun lamps• Blood banks• Sanitary pads
• Stainless steel• Zippers• Disney firstanimated movie• Car radio• Biofuels• General purpose
processor• Car fuel-efficiency• iTunes, iPod• Surveillancetechnology• Wikipedia• Supermarkets• Ritz Cracker

Source: Havas Group, BCG Henderson Institute

WW2

'70s
oil crisis

WW1 / Spanish Flu• Auto maker• Dollar store• Fast food chain• Computers• Jet engines• Rockets• Penicillin• Atomic technology• Shipping co.
• Technology andinternet co.
• Software co.
• Home improvement • Software co.
retailer• Online radio

15

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B.3

Illustrative,
Non-exhaustiveReinvent
your offering
How does this crisis
create an opportunity
for reimagining?

Reimagine and redesign offerings to meet new customer needs during COVID-19 crisis

1

Redesign offerings to serve Innovate into lower price points: Develop low-cost
product lines to capture cost sensitive customers
cost-conscious customers

2

Reimagine role of storeand deploy new formats

3Enter and grow adjacencies Introduce new products: Design products that meet health and safety needs
to meet new customer
Pivot current product offerings: Target areas of increased customer demand
needs

Reconsider store formats: Rationalize number of stores and transform large
unprofitable stores into smaller stores that function as hubs for pickup and drop-off
Create unique in-store experiences

Example | B2C rideshare company pivots to double-down on food and other delivery services
Major decline to its corerideshare business

Reallocated resources to
new delivery businessPre-crisis ~75% ofrevenue from corerideshare offering

Introduced new
non-food delivery
services

Rideshare revenue
declined ~80% as
stay-at-home
regulation started

Transitioned 40% ofdrivers to delivery

Source: press releases; BCG Consumer sentiment research; BCG

Targeted cross-sellof users to delivery+89%
April delivery
bookings
vs. last year

16

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B.3

Reimagine
omnichannel
How can we best serve
our customers
seamlessly across theirpurchase journeys?

Capture and serve millions of people engaging digitally, providing
a consistent customer-centric experience across channels
B2C | Chinese cosmetic company

B2B | Animal health manufacturer

Leveraged a social media app to connect with
consumers and sell online

Established NextGen sales engine to deliver acustomer-centric personalized experience
AcquireNurtureManageSuccess

LEARN

BUY

USE

EngageSell

Support• Designed livestream shopping event• Prioritized based on account potential• Leveraged digital chat tools for engagement• Leveraged always-on digital selling• Sent direct 1-1 offers to consumers• Alerted sales reps to take action in real time

100+

120+

4-7x

-30%

Featured beauty
advisors

February 2020 vs.
February 2019 sales

Sales productivity
improvement

Decrease incost of sales

Source: Alibaba Group; MIT Sloan Management Review; BCG Consumer Sentiment Research; BCG Case Experience17

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B.4

B.5

Treat COVID-19 as catalyst for influencing customers in online channels

Supercharge
precision
advertising

1

Reinvent your brand now
Take advantage of unprecedented customer attention

2

Capitalize on increasing ROIs
Be ready to lock in low rates as others cut spending

-63%

Cost
per ad+23% size

3

Optimize media mix
Increase flexibility of budget and shift spend to TV and digital+176%

Impressionsdelivered+8%4Invest thoughtfully in demand generation
Tap into latent demand as regions and categories rebound+10%

Conversion
rate

BasketROI

April vs. Oct/Nov

Example | B2B ophthalmic lens manufacturer adopts test/learn/scale approach
Launch and measure rapid pilots then scale winners…

…to capture near-term value
Set-up cross-functional 'war room'
Run dozens of tests each week
Measure in real-time

Accelerate

Scale

SustainLaunch pilots

Optimize media
spend at scale

Embed new ways ofworking

Source: IAB survey of media buyers; BCG Case Experience

Iterate weekly and adjust budget
2x return on marketing investment

18

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

How can we capture
and retain the surge
in digital trial anddemand?

Example | B2C health and wellness retailer
with increasing ROI on digital media

Personalize andde-average value
How should we priceand promote our
products to serve
unique needs andensure customer
trust?

Evolve pricing to deliver personalized value and serve unique customer segments
Understand and serve de-averaged customer needs

Personalize value

Illustrative personas

Unemployed person stretching his dollar by buying
in bulk and seeking discounts and promos
Frontline health care worker looking for the safety
and convenience of same-day home delivery
Millennial working from home who values the easeof subscription boxes and hassle-free returns
Retail shop owner looking for flexibility on inventory
replenishment and lease payments

De-average pricing in line withsegments—premium to value
Shift from mass promos to personalized
offers, including value-add services
Incentivize and reward desiredcustomer behaviors
Introduce new pricing models aligned
to changing behaviors
Create guardrails for short-term
incentives that protect lifetime value

Example | B2C convenience retailer shifts from mass to personalized promotions
Prior to and also during crisis
Shifted budget frommass promos tovendor-funded 1-1 offers

Source: BCG Case Experience

Optimized offers to drive
real-time conversion andengagement+90%+$100M

Offer redemption
vs. last year

Incremental
revenue19

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

B.6

Advanced
Analytics

DigitalExperiences

Scalable Tech
Architecture

Innovation
MindsetBuild advanced analytics capabilities(including Lighthouse) to use highfrequency data to sense demand
shifts and consumer sentiments

Scale up e-commerce andomnichannel capabilities;
invest in personalization anddigital sales and marketing

Leverage the power of data andtechnology to simplify data andapplication landscape; aid scaleup of customer activities online

Upskill human capital toestablish a mindset for
innovation and agility tosecure and grow top line

Source: BCG

20

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Companies will need to augment their capabilities to win in the new reality

Carve out time forreflection

To see the big picture, stand back and reflect; create a rhythm of action andreflection in business

Ask active, open
questions

Prompt questions that drive exploration of fresh ideas and approaches thatcan bring creativity

Allow yourself to be
playfulCreate an agile environment that allows for practice of imagining andimprovising; loosen up from regular, goal-driven approach

Set up a system forsharing ideas

Facilitate collective imagination by creating forums for people tocommunicate without hierarchy

Seek out the anomalous
and unexpected

Look externally to solve tough new problems; examine accidents, anomalies,
and particulars

Encourage
experimentation

Experiment and test ideas in the real world (often generates unexpected
outcomes and stimulate further thinking)Stay hopeful

Imagination feeds on aspirations and aggravations (give people grounds forhope, imagination, and innovation)

For more detail,refer to the article
We NeedImagination Now
More Than Ever

21
Source: Reeves M, Fuller J. We Need Imagination Now More Than Ever. HBR, Apr'20

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Guide to building an innovation mindset for organizations

1

Guide for leaders
How companies can adapt and transform to win

2

Updated epidemic progression and impact
Epidemic progression and virus monitoring
Economic and business impact
Consumer sentiment snapshot

22

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Sensing consumer behavior and seizing demand shifts

~2.1M reported recoveries1 globally so far;case-doubling rate improves to 35 days

EPIDEMIC PROGRESSION &VIRUS MONITORING

As of 22 May 2020

UK

Italy

USA

China
Iran

22nd May' 20

21
8
days

29
12
days

18
35
days
days

Japan
South
Korea

India

8th May'20# of days of doubling2 the cases globally

793k
(28%)

Days of doubling cases:
0-3 days

185
Countries with cases3

1,322k

2,057k

(34%)

(39%)

Total # of recoveries (as % of confirmed cases)
3-6 days

6-14 days

5.2M[∆2%]4

Confirmed cases globally

14-30 days

338k

>30 days
41
55

51

71
67

[∆1.4%]4

Fatalities globally# of countries with community transmission5

Note: Continued cases and fatalities are subject to different testing, propensity, reporting standards, and hence are imperfect measures
1. Refers to total reported recoveries as a percentage of total reported infections (cases) 2. No. of doubling days based on 7-day CAGR 3. Basis Johns Hopkins CSSE 4. Daily growth rate basis 7-day CAGR;
5. Community transmission defined basis WHO - Countries experiencing larger outbreaks of local transmission on basis of decided factors
Sources: Johns Hopkins CSSE; Our world in data; WHO situation reports; BCG

23

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

FranceSpain

24th Apr'20

As countries move into Fight phase, several have started to see
decline in number of daily cases

EPIDEMIC PROGRESSION &VIRUS MONITORING

As of 22 May 2020

Non-exhaustive

Several countries increasing doubling rate...

Fight

Daily cases (seven-day moving average)
for countries2 with doubling rate > 21 days

Daily growth rate of total cases (seven-day average)
7%

70,000Chile

6%South Africa

Kenya

5%

Argentina
Nigeria

4%

BrazilIndia

MexicoEgyptColombia
Russia

3%
2%
1%
0%
1,000

60,000Cases doubling:
14 daysUS
Cases doubling:
21 days

Ghana
Singapore
Canada Iran
SwedenGermany
MoroccoChina Belgium
UK
Japan
FranceS Korea
Italy
Austria
Australia
Spain

CanadaAsia1South America

1. Includes Middle East & Australia 2. Countries selected from the chart on the left
Source: Johns Hopkins CSSE; Our World in data; BCG

Spain
UK

20,000Italy

10,000GermanyUS10,000100,000
1,000,000
Cumulative number of confirmed cases (log scale)
Europe40,00030,000Algeria

North America

50,000Africa001 MarFranceIran

13 Mar

27 MarNorth America

10 Apr

24 Apr

08 MayEuropeAsia1

Africa22 May24

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Rates improving from top to bottom

Flatten...driven by decline in number of daily cases

Some countries currently have cases doubling under 21 days;
strong monitoring essential in the next few weeks

EPIDEMIC PROGRESSION &VIRUS MONITORING

As of 22 May 2020

Non-exhaustive

Some countries currently have high case growth rate...

Fight

Daily cases (seven-day moving average)
for countries2 with doubling rate < 21 days

Daily growth rate of total cases (seven-day average)
7%

70,000Chile

6%South Africa

Kenya

5%

Argentina
Nigeria

4%

BrazilIndia

MexicoEgyptColombia
Russia

3%
2%
1%
0%
1,000

60,000Cases doubling:
14 daysCases doubling:
21 days

Ghana
Singapore
Canada Iran
SwedenGermany
MoroccoChina Belgium
UK
Japan
FranceS Korea
Italy
Austria
Australia
Spain

MexicoRussia20,000

Asia1

South America

1. Includes Middle East & Australia 2. Countries selected from the chart on the left
Source: Johns Hopkins CSSE, Our World in data; BCG

India

US

10,00010,000100,000
1,000,000
Cumulative number of confirmed cases (log scale)
Europe40,00030,000Algeria

North America

50,000AfricaBrazil001 Mar

13 MarNorth America

27 Mar

10 Apr

24 Apr

08 MayEuropeAsia1South America

22 MayAfrica25

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Rates improving from top to bottom

Flatten...driven by increase in number of daily cases

While countries further relax lockdown measures,continued testing capacity ramp-up is critical

EPIDEMIC PROGRESSION &VIRUS MONITORING

As of 22 May 2020

Non-exhaustive

Daily new cases per million population1
100

US

60
Sweden
North America

40

UK

CanadaEuropeAsia2

20South Africa

MexicoSpain
France0South America

Belgium
Italy

Germany

Switzerland Japan

10

India

20

AfricaIceland Malaysia
South Korea
IsraelAustralia

30

Bubble size represents
total cumulative cases/M(Here 2000 cases/M)

170
Total tests / Total cases

For countries to move to the right, they need an
Integrated Virus Monitoring System that includes testing, tracking, and tracing
1. Taken as 7-day moving average; 2. Includes Middle East & Australia
Source: Our World in Data, Worldometer, BCG Analysis

26

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Singapore

BrazilAccuracy has critical implications for effective medical response;
Molecular tests continue to be the "gold standard"

EPIDEMIC PROGRESSION &VIRUS MONITORING

As of 18 May 2020

1

Illustration for US: Implications of Accuracy for Covid-19 Testing
Base data: 100,000 tests performed1; 5% disease prevalence"Gold standard" molecular tests
provide the most accurate
detection of the virus genetic
material (RNA), typically from
respiratory swabs, and can detect
the virus before symptoms appear

Sick patients = 5,000

Healthy patients = 95,000

False Negative Patients(sick patients misdiagnosed negative)

False Positive Patients(healthy patients misdiagnosed positive)

100

1000
2

Serological tests
detect the human immune
response to the virus about one
week after symptoms appear;
many "rapid" serology tests
launched vary significantly inaccuracy

Misdiagnosed
infectious people
do not isolate
and propagate
infection further

1,250

3,500

Current Molecular "goldstandard" test for COVID-19
Sensitivity 98%
Specificity 99%
May detect ~2-4 days before
symptom onset
Antigen tests(currently under development)
Sensitivity2 80%
Specificity2 99%
May detect virus on similar
timing as molecular testing
Rapid finger-stick serology"high quality"
Sensitivity 75%
Specificity 95%
Detection ~6-10 days after
symptom onset
Rapid finger-stick serology"low quality"3
Sensitivity 30%
Specificity 60%
Detection ~6-10 days after
symptom onset

950

950

4,750

A positive serology
test result (true or
false positive) thatsuggest an active
COVID-19 infection
will need a
confirmatory
molecular test

38,0001. Roughly equivalent to US nationwide daily throughput as of March 31, 2020 2. Estimated using Quidel antigen test; while the specificity of that test was reported as100% from 84 samples, 99% was used here as 100% specificity in unlikely in a large patient sample 3. The Guardian (“Coronavirus test kits withdrawn in Spain overpoor accuracy rate”, March 27, 2020) Source: Expert interviews; Popular press articles; Product specifications; BCG

27

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Two test types available for
Covid-19 that differ in what theydetect and how well they detect

Ramp up of supply chains critical to fully achievemolecular testing potential

EPIDEMIC PROGRESSION &VIRUS MONITORING

Capacity unlock levers2

Current daily MDx testing
throughput: 200,000+

Preliminary, US Example

Capacity
impactDescription

Workflow/installbase impact

ExamplesRemote specimens

High• Enabling all MDx equipped labs to receive
remotely collected samples• Non- /semi-automatedSaliva testingHigh• Validating and scaling saliva testing• Non- /semi-automatedSwab kits

Medium• Alleviating swab kit shortages• Non- /semi-automated

EMR/Contracting

Medium• Enabling all MDx labs to contract with andreport results to hospitals• Non- /semi-automatedIncreased staffing

Medium• Adding more lab staff and longer shifts• Non- /semi-automated,
Near-patient, POC• Alleviating RNA prep kit shortages• Non- /semi-automatedRNA prep kits

Low

Other

Low

Instrument inventory

Low

Other MDx testing technologies(e.g. LAMP, TMA, CRISPR)High

Max pragmatic throughput:
400,000-500,000• Such as, if install all inventory on hand by
vendors under current supplies constraints• If install all inventory on hand with allother levers in place• Utilizing other high-throughput and POC
MDx testing technologies beyond PCR

Estimated directional impact to currently observed throughput(Defense
production)• All• All, esp. automated• All

High: >30% Medium: 15-30%

Low: <15%

1. Average of empirically observed daily throughput in April to date 2. Impact of levers estimated semi-quantitatively when fully implemented, short term impact likely muchsmaller and will vary by lever
Source: Expert interviews; BCG

28

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

As of 18 May 2020

Economic forecasts deteriorating for US and Europe,
rebound of global GDP not expected before 2021

ECONOMIC & BUSINESSIMPACT

As of 22 May 2020

GDP level forecast2

GDP growth forecast vs. baseline

EOY 2021 vs. EOY 20192021

-10% -8% -6% -4% -2% 0%
Forecast -5.9%

2%

4%

6%

8% 10%-10% -8% -6% -4% -2% 0%Baseline 2.0%

2%

4%

6%

1.7%

4.7%

8% 10%

US

97-100%
Forecast range
1.2%

5.8%

6.0%

9.2%

107-112%

China
-7.5%

1.4%

1.3%

4.7%

Europe95-99%
1.9%

5.8%

6.5% 7.4%

India

103-111%
-5.2%

0.7%

0.5%

Japan

3.0%

96-99%
Forecast IMF (Apr 2020)

Baseline IMF (Jan 2020)

Forecast range Banks3

Last week's forecast range (onlyshown if change is significant)Note: As of reports dated 31 March 2020 to 05 May 2020, YoY forecasts 1. Announced by the German Federal Ministry for Economic Affairs and Energy on 29 Apr 2020 2. Range calculated with 25th & 75th
percentile values of forecast range 3. Range from forecasts (where available) of International Monetary Fond, JP Morgan Chase; Morgan Stanley; Bank of America; Fitch Solutions; Credit Suisse; Danske Bank; ING
29Group; HSBC Source: German Federal Ministry for Economic Affairs and Energy; Bloomberg; IMF; BCG

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

2020

TSR still not back on pre-crises level across sectors;
11 sectors have >10% of companies with high probability of default

ECONOMIC & BUSINESSIMPACT

As of 22 May 2020

Decline reflects economic scenario and consumer sentiment

Healthier sectors

Pressured sectors

Vulnerable sectors

PharmaFood/staples RetailHousehold Products
Health Equipment
Semiconductors
Tech Hardware
SoftwareFood & Beverage
Retailing
Telecom
Materials
Prof. Services
Transport
Media
Utilities
Capital Goods
Auto
Financials
Durable Goods
Insurance
Hospitality
EnergyReal Estate
Banks

21 Feb 2020
- 20 Mar 2020

21 Feb 2020
- 22May 2020

-20%
-10%
-16%
-31%
-30%
-26%
-30%
-23%
-40%
-17%
-32%
-30%
-34%
-36%
-30%
-35%
-41%
-35%
-39%
-39%
-44%
-52%
-39%
-39%

-2%
-6%
-7%
-8%
-9%
-10%
-12%
-12%
-13%
-14%
-14%
-15%
-15%
-18%
-19%
-20%
-22%
-23%
-25%
-29%
-32%
-32%
-33%
-35%

Companies with probability of default >15%2
08 May 2020
- 22 May 2020

21 Feb 2020

22 May 2020

0%
0%
0%
0%
0%
0%
9%
0%
0%
0%
4%
0%
0%
0%
0%
2%
0%
0%
0%
0%
7%
0%
0%
0%

11%
0%
0%
0%
0%
0%
8%
0%
41%
15%
15%
0%
36%
15%
3%
11%
33%
0%
5%
0%
36%
21%
17%
4%

Note: As of 6 May 2020; Based on top S&P Global 1200 companies; Sectors are based on GICS definitions 1) Performance is tracked for two periods, first from 21 February 2020
(before international acceleration of outbreak) to 20 March 2020 (trough of the market) and from 20 March 2020 through 6 May 2020 based on median
2. Implied by 5-year Credit Default Swap based on median Source: S&P Capital IQ; BCG ValueScience® Center; BCG

08 May 2020
- 22 May 2020

Pos. trend >= 2%
No sig. change
Neg. trend >= 2%

30

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

TSR performance1

CONSUMER SENTIMENTSNAPSHOTAs of 11 May 2020

Respondents who agree that… (%)"The worst of the coronavirus is still ahead"
100
80
60
40
20
0
March 6–9

March 13–16

March 27–30
Italy

UK

US

April 10–13
FranceApril 24–27

May 8–11

China

Question text: “How much do you agree with each of the following statements about the coronavirus?”
Source: BCG COVID-19 Consumer Sentiment Survey, March 6–May 11, 2020 (N =2000-3500), unweighted, representative within ±3% of
census demographics

31

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Consumers
continue todisplay lesspessimistic
outlook thanfour weeks ago

With easing of lockdowns, consumers have started
stepping out for work and essentials

CONSUMER SENTIMENTSNAPSHOT

Workplaces

Retail stores and recreation spaces

Tracked as changes1 in visits to workplaces

Tracked as changes1 in visits to shopping centers, restaurants,
theme parks, movie theaters, etc.

20%

20%

Increase in
movement

0%

0%

-20%

-20%

-40%

-40%

-60%

-60%

-80%

-80%

08 Mar

22 Mar

05 Apr

19 AprGermany

03 MayItaly

17 MayFranceIncrease in
movement

08 MarNorwayUnited States

22 MarCanada05 Apr

19 Apr

03 May17 MaySouth Korea

1. Taken as weekly average compared with decline from baseline (median value to corresponding day of the week during Jan 3-Feb 6 2020); Represented only for selected countries.
Source: Google Covid-19 Community Mobility Reports; BCG

32

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

As of 16 May 2020

Shift of spend visible to categories relevant in stay-at-home context

CONSUMER SENTIMENTSNAPSHOTAs of 11 May 2020

US example

Retail electronics

Mass retail
Pharmacy
Grocery
Personal care
Packaged food and beverages

Online marketplace
Online grocery
OTC health care
Pet food and careOrganic and fresh foods

Moderate
impactTobaccoHome and DIY retail
Hobby retail
Alcohol

Health, fitness, and beauty

Rapid
deceleration

Apparel and accessories
Department stores

Restaurants
Away from home entertainment

TravelPublic transportation
Rideshare

Declining growthModerate growthHigh growth

Rapid
acceleration

Trajectory before pandemic
Note: Based on credit card and IRI data from the US for March 2020 vs. Compound annual growth rate from January 2016 to January 2020 in same
categories
Source: BCG Gamma; BCG Henderson Institute; BCG

33

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Short-term COVID-19 impact

COVID-19 short term impact on long-term growth trends before the crisis

In-store purchase frequency has decreased while transaction size
has increased

CONSUMER SENTIMENTSNAPSHOTAs of 06 May 2020

US example

Panic creates a bump

Divergent behaviors stick

During the initial outbreak, consumers bought more
and more often, creating a major spike in sales

Afterward, behaviors diverged, with consumers
buying less often, but buying more

100

50

0

-50
Jan29

Feb05

Feb12

Feb19

Transaction size (average)

Feb26

Mar04

Mar11

Total transactions

Mar18

Mar25

Apr01

Apr08

Apr15

Apr22

Apr29

Total sales

Note: Spending data is based on consumer credit card/debit card/checking account activity from a panel of US consumers from Earnest Research(tracked responses exclude cash/other)
Sources: Earnest Research; BCG

34

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

Grocery sales | Year-over-year change (%)

Shoppers preferring strong and integral brands intimes of uncertainty

CONSUMER SENTIMENTSNAPSHOTAs of 20 April 2020

Net likelihood1 of buying brands that stood out in a positive way during the crisis (%)+32%

Ø +35%

+22%

US

UK

Germany

Italy

China

Example: How companies supported society during COVID-19
Protective gear

Ventilators

Staff

Suppliers

Return flights

Clothing company
started producing
50,000 medical
gowns and 2.5
million masks in
April 2020

Automotive
manufacturer isbuilding 50,00030,000 ventilators
per month starting in
April 2020

Fast-food chain
lends 1,750 workers
to grocery stores tocope with initial
increase in shopping
demandNatural resources
company accelerated~$60M payments tosmall suppliers by
reducing payment
terms

Airline company
brought back 90,000
people in 160
flights, partially fromcountries not
approached before

1. Difference between people that are likely to increase and people that are likely to decrease
Source: BCG-COVID-19 Consumer Sentiment Survey, April 17-20, 2020 (N = 5728 across US, UK, Germany, Italy and China; unweighted); press releases;
BCG
35

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

+36%

+47%

+40%

Additional perspectives on COVID-19
Selected general publications

Selected sector publications

Edition #6

Edition #5

Marketing & Sales

Demand Sensing

Consumer

Consumer

Restructuring costs, andmanaging cash andliquidity

Revamping
Organizations for the
New Reality

COVID-19 Consumer
Sentiment Snapshot #9: A
Lighthouse to Navigate the
New Reality

Shining a Light on
Customer Demand During
the COVID-19 Crisis

COVID-19 Consumer
Sentiment Snapshot #10:
The Trip Back

COVID-19 Consumer
Sentiment Snapshot: Special
Feature—Asia-Pacific

Edition #4

Edition #3

Revenue Management

People & Organization

Automotive

Retail

Accelerating digital &technology
transformation

Emerging stronger fromthe crisis

A Revenue Management
Reset in Consumer
Goods

People Priorities in the
Ramp-Up and Return to
Work

How to Avoid the Auto
Industry’s Looming PriceWar

The $2.5 Trillion
Opportunity for Grocers
That Are First to the Future

Edition #2

Edition #1

Supply Chain

LeadershipTechnology

Healthcare

Preparing for the restart

Facts, scenarios, andactions for leaders

The New Reality for Chief
Supply Chain Officers

Communicating
Leadership During
COVID-19

Businesses in Asia-Pacific
Can Find Resilience and
Growth in the Cloud

The Timelines and
Implications for COVID19 Vaccines

Source: BCG

36

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.

COVID-19 BCG Perspectives

Disclaimer

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The situation surrounding COVID-19 is dynamic and rapidly evolving, on a daily basis. Although we have taken great careprior to producing this presentation, it represents BCG’s view at a particular point in time. This presentation is not intended
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The services and materials provided by Boston Consulting Group (BCG) are subject to BCG's Standard Terms(a copy of which is available upon request) or such other agreement as may have been previously executed by BCG.
BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerningthese matters. This advice may affect the guidance given by BCG. Further, BCG has made no undertaking
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