COVID-19

7.1.
Version5.1.
2020Version
BCG Perspectives

May2020
8 May
Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26
Facts, scenarios, and actions for leaders
Publication #7 with a focus on
Sensing consumer behavior and seizing demand shifts

Version: 26 May 2020

 COVID-19
BCG Perspectives
Objectives of this document

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
COVID-19 is a global Leaders need to drive an integrated
societal crisis response to navigate the crisis

We at BCG believe that the COVID-19 outbreak is It is the duty of health, political, societal, and business
first and foremost a societal crisis, threatening leaders to navigate through this crisis. A complex
lives and the wellbeing of our global community. interplay of epidemic progression, medical response,
Society now, more than ever, needs to collaborate government action, sector impact, and company
to protect people's lives and health, manage mid- action is playing out. This document intends to help
term implications, and search for lasting solutions. 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
COVID-19 will be a journey with three distinct phases, requiring
an integrated perspective

Flatten Fight Future

Typically the initial phase after a pandemic Finding paths to collectively fight the virus, Disease controlled through vaccine/cure/
outbreak–goal is to urgently limit number restart the economy, and support society in herd immunity, and treatment within
of new cases, especially critical care balancing lives and livelihood sustainable medical capacities possible

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Social distancing (lockdown) and partial business Increasing economic activity with recovering Reactivated economy with strong business
closures lead to economic recession with large GDP, some business reopenings, and social rebound and job growth, social restrictions
employment impact distancing on sustainable level 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
 NAVIGATING BUSINESSES
THROUGH THE CRISIS

Flatten Fight Future

Establish crisis 1 Develop Scenario-Based

Planning Approach to
2 Create a Rapid Response
and Transformation
management manage uncertainty (RR&T) team

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
action areas
for business 3 Revamp organization for 6 Restructure Cost,
the New Reality manage Cash & Liquidity
leaders
Navigate 4 Sensing Consumer Behavior 7 Emerge Stronger, drive Focus
and seizing Demand Shifts advantage in adversity of this edition
through
Flatten, Fight,
and Future 5 Stabilize and restart Supply 8 Accelerate Digital and
Chain, Manufacturing Technology transformation

9 Help Society during

COVID-19

Note: RR&T = Rapid Response and Transformation Team

Source: BCG 3
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

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
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 leaders
1 Taking an integrated perspective on
health/medical progression,
governmental responses, societal
2 Thinking multi-
timescale in a Flatten-
Fight-Future logic
need to think along reactions, and economic implications
two dimensions: to understand business/sector impacts

Source: BCG 4
1 Guide for leaders
Sensing consumer behavior and seizing demand shifts

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
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
COVID-19: Impact dashboard
As of 22 May 2020
Epidemic Progression Economic Impact Business Impact

IMF Banks
Stock market performance11
5.2M 2.1M 338K GDP forecasts [%]
# of cases # of recoveries # of fatalities 2020 -10 -8 -6 -4 -2 0 2 4 6 8 10 20 Mar vs 21 Feb -31% -30% -34% -10%
-7.5%7 Baseline 1.3%8
24 Apr 08 May 22 May Europe 22 May vs 21 Feb -11% -19% -18% -7%

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
-5.9% 2.0% S&P500 FTSE100 DAX CHN SSE
# of days of case
doubling1
21 29 35 US
-5.2% 0.7% Total Shareholder Returns11
# of reported recoveries Japan
as % of total cases
28% 34% 39%
1.2% 6.0% First column: 21 Feb to 20 Mar; Second column: 21 Feb to 15 May
# of countries with China Americas Europe Asia
1k+ cases
83 90 104 1.9% 5.8%
Pharma -19% -2% -20% -9% -22% -2%
India
# of tests / case2 10 12 15 F&B12 -26% -15% -24% -14% -12% -3%
Estimated current employment impact9 Telecom -17% -14% -20% -19% -14% -12%
# of tests / million2 13k 22K 34K Total employment Employees % of employees
2019 (M) impacted10 (M) impacted
Software -30% -8% -32% -14% -28% -15%

Vaccine Treatment US ~159 ~39 ~24% Retailing -42% -15% -36% -23% -24% 4%

Trials in pre-clinical UK ~33 ~8 ~25% Capital goods -38% -22% -35% -24% -29% -14%
stage and beyond3 139 122
Auto -47% -24% -45% -27% -32% -20%
Germany ~45 ~10 ~23%
Trials in Phase 1 and
beyond4
7 50 France ~28 ~13 ~46% Real Estate -42% -34% -26% -37% -22% -20%
Energy -56% -37% -45% -32% -41% -30%
Current est. timeline 12-36 6-24 Italy ~23 ~7 ~30%
for approval & scale-up months5 months6 Banks -41% -35% -44% -47% -26% -21%
Spain ~20 ~4 ~20%

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 month
development "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 6
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)
COVID-19 drives changes in consumer behavior; de-averaged perspective
required, but four key trends observed

Change in consumer behavior is not uniform

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

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Large shifts in spend Significant turn Fewer transactions Increased trust in
categories to online channels with higher value brands with purpose
36% consumers trading up/down on ~20% web-traffic increase observed Groceries have seen a 30%+ 35%+ net likelihood of buying from
prodcuts1, 60% of companies increase for retail categories vs. ~60% drop increase in transaction value for brands that have positively stood
spend on IT/digital2 in footfalls3 month of April vs. pre-crisis4 out 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 and
garden 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. BCG- 7
COVID-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
Embedding deep sensing capabilities, and extending brand relevance and reach
are key priorities for leaders
Flatten Fight Future

Develop rapid demand sensing

A capability ("Lighthouse") B Extend brand relevance and reach

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
In some cases, fully rebuilding demand models
and forecasts may be essential 01 Clarify and amplify brand purpose

01 Leverage high-frequency data 02 Align to new shape of demand

02 De-average demand patterns 03 Reinvent your offering

04 Reimagine omni-channel

05 Supercharge precision advertising

06 Personalize and de-average value

Source: BCG 8
Pace and de-averaged nature of change make rapid sensing
capabilities a key imperative A

Change is coming at fast pace and in Imperative to build rapid demand-

different shapes sensing capabilities

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
The pace of change has increased by multiples

We have seen two years' worth of

digital transformation in two months Short-term sensing Medium-term scenarios
– Satya Nadella, CEO of Microsoft
Sensing short-term trends Understanding scenarios
in demand based on for changing shape of
Change in consumer behavior is not uniform high-frequency data demand and structural shifts

Geography Sector

Sales channel Target group

…
Source: Microsoft; BCG 9
A.1 A real time 'Lighthouse' to navigate uncertainty

Leverage high- Internal External

Products and customers Epidemiological models Fully rebuilding past
frequency data Order intake Macroeconomic and government models and analyses

Data
Sales Consumer Activity Index™
Production Customer spend …customer spend analysis
Inventory Consumer sentiment offers retrospective
Promotional activity Footfall, search, social trends
How do we operate in

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
a world where pace of Real-time data cockpit
change has increased Current selection: Italy Effective reproduction number

by multiples? 0 1
5.0
Estimated Past range Insight on current
2.5 demand changes
0.0
Predicted Future range
…web traffic analysis
-2.5 predicts near-term actions
Example

Mar Apr May Jun Jul ‘20

Italy
Change in footfall (indexed, in %)
Spain 100 Resi-
dential
0
Work-
Outlook on future
places demand changes
-100
Mar Apr May ‘20 Transit ..consumer sentiment
Retail analysis signals persistence

Source: BCG Lighthouse 10

A.2 To gain deep insight into consumer behavior, de-average across multiple factors

Geography Sector Sales channel Target group …

De-average
• Countries/states • Not all industries • E-commerce • Spend differs by
demand patterns operate on different are hit in the same booming during customer
timelines way “Flatten” generation
• Regional/local • Dependency on • Brick and mortar • Gen X more stable,
authorities decide global supply chain stores require millennials
reopening is critical reimagination diverging
How do we deal with

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
wide range of change As of April 2020
in consumer behavior?
Example | US Consumer Activity Index (CAI) can help prioritize business decisions
Single metric available by geography Decision basis for optimizing marketing/
(down to the county or market level) advertising spend by region

Improved
100 Indicative
Increase spend Decrease spend
Clark County Madison County
85 $130K (CAI 68) $700K (CAI 75)
Washington County
$600K (CAI 51)
82.5 King County
$350K (CAI 54)
50 Wayne County
CAI

CAI
$765K (CAI 32)
80 Lincoln County
$490K (CAI 21) Nye County
$490K (CAI 45)
77.5 Hold spend Reallocate spend
0
75 0 250 500 750 1,000
Decreased Advertising spend ($K)

Source: BCG Consumer Activity Index; BCG 11

Key priorities for extending brand relevance and reach B

1 2 3
Extend Clarify and amplify Align to new shape of Reinvent your
brand purpose demand offering
brand

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Clarify your reason for being and Discern short- and long-term Redefine your offering to service
relevance connect it to changing needs shifts in customer demand the new reality

and reach Create sustained advantage by

taking bold and tangible actions
Capitalize on opportunities by
placing the right bets
Pivot to new products, services to
target changed customer demand

4 5 6
Reimagine Supercharge Personalize and
omnichannel precision advertising de-average value
Invest to be where your Pinpoint and capitalize on Reset price and promotion
customers are pockets of high ROI strategies to deliver value across
segments
Provide a consistent, customer- Implement targeted advertising
centric approach across channels spend to gain share Create guardrails for short-term
incentives that protect lifetime value
12
 Focus on how your brand can take a lead …and create
B.1 in evolving societal needs… sustained advantage
Clarify and

Differentiated
Lean into purpose and values
amplify Community 1 internally and externally
brand purpose Connection Take tangible, bold, and
2 relevant actions
PART 1
How can we Exploration
Our unique The needs Create emotional connection
authentically and authentic PURPOSE
of theP world
URPO 3 through authentic messages
Sustainability

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
SE
reinforce and live strengths we serve

our brand purpose 4 Expand avenues for CEOs to

Table stakes
Health and wellness
speak directly to customers
during this crisis?
Safety and security
Bolster 'social license to
5 operate' on societal factors

Example | B2C airline leans into commitment to uplifting service

Before COVID-19, purpose-driven business with During the crisis, reinforces purpose by:
mission to lift the world • Offering free flights for medical personnel
• Empowered agents to give consumers flexibility • Extending statuses and benefits for a full year
• Established profit-sharing airline partnerships • Waiving fee changes and lengthening ticket
• Offered the same benefits to all employees expiration dates for passengers

Source: BCG BrightHouse; BCG Case Experience 13

 Identify evolving demand Capitalize on opportunities opened
B.2 spaces and customer needs up by new shape of demand
Examples Examples
Align to new shape Strengthened drivers of choice Emergence of new sales opportunities
of demand Casualization of apparel Auto purchases as concern about alternatives rises

Increasing 'table stakes' Improved accessibility through leveraging digital

How can we capitalize Sanitation and hygiene expectations Virtual workout classes compared to gyms and fitness studios
on temporary changes
Pivots in lifestyles & habits Expanded ways of customer engagement

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in demand and plan Cooking dinner at home Live-streaming via social media with integrated commerce
for long-term
structural shifts? Major shifts in supply New white space and innovation opportunities
Disruption in retail landscape Tech-enabled shopping leveraging AR/VR

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

30k 90% 500+ 2k+ 11%

Partners across Partners closed Studios that have Pre-recorded audio Increase in monthly
30 countries indefinitely due to crisis added live classes and video workouts 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 14
Source: CNN Business; App Annie; BCG Consumer Sentiment Research; BCG Case Experience
 Illustrative,
Non-exhaustive
Crisis creates opportunity for innovation and imagination
B.3
Reinvent
your offering COVID-19

'70s Dotcom /
How do crises create WW1 / Spanish Flu Great Depression WW2 oil crisis SARS
an opportunity for

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
• Airplane • Health care co. • Auto maker • Shipping co. • Technology and
reimagining? manufacturer internet co.
• Tire manufacturer • Dollar store • Software co.
Founded • Auto maker • Insurance co. • Fast food chain • Home improvement • Software co.
• Rental car co. retailer • Online radio
• Auto company • Soap company spon- • Chemical company • Airline diversified • Wholesale
made aerospace sored soap operas made synthetics • Car manufacturer marketplace
engines • Bank entered retail • Airplane manu- improved fuel launched B2C
Re-
• Auto company brokerage facturer made efficiency ecommerce
imagined
made tractors • Electricity company pressurized aircraft • Online retailer
offered appliance expanded
financing marketplace

• Sun lamps • Disney first • Computers • Biofuels • iTunes, iPod

• Blood banks animated movie • Jet engines • General purpose • Surveillance
Invented/ • Sanitary pads • Car radio • Rockets processor technology
Developed • Supermarkets • Car fuel-efficiency • Wikipedia
• Stainless steel • Penicillin
• Zippers • Ritz Cracker • Atomic technology

Source: Havas Group, BCG Henderson Institute 15

 Reimagine and redesign offerings to meet new customer needs during COVID-19 crisis
B.3
Redesign offerings to serve Innovate into lower price points: Develop low-cost
Reinvent 1 cost-conscious customers product lines to capture cost sensitive customers
your offering
Reconsider store formats: Rationalize number of stores and transform large
Reimagine role of store
How does this crisis 2 and deploy new formats
unprofitable stores into smaller stores that function as hubs for pickup and drop-off
Create unique in-store experiences
create an opportunity

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
for reimagining? Enter and grow adjacencies Introduce new products: Design products that meet health and safety needs
3 to meet new customer
Pivot current product offerings: Target areas of increased customer demand
needs

Example | B2C rideshare company pivots to double-down on food and other delivery services

Major decline to its core Reallocated resources to

rideshare business new delivery business
Pre-crisis ~75% of Introduced new
non-food delivery
+89%
revenue from core
rideshare offering services

Rideshare revenue Transitioned 40% of

drivers to delivery April delivery
declined ~80% as bookings
stay-at-home Targeted cross-sell vs. last year
regulation started of users to delivery

Source: press releases; BCG Consumer sentiment research; BCG 16

 Capture and serve millions of people engaging digitally, providing
B.4 a consistent customer-centric experience across channels
Reimagine B2C | Chinese cosmetic company B2B | Animal health manufacturer
omnichannel
Leveraged a social media app to connect with Established NextGen sales engine to deliver a
consumers and sell online customer-centric personalized experience
How can we best serve Acquire Nurture Manage Success
our customers

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
seamlessly across their
purchase journeys? LEARN BUY USE

Engage Sell 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 February 2020 vs. Sales productivity Decrease in

advisors February 2019 sales improvement cost of sales

Source: Alibaba Group; MIT Sloan Management Review; BCG Consumer Sentiment Research; BCG Case Experience 17
 Treat COVID-19 as catalyst for influencing customers in online channels
B.5
Reinvent your brand now Example | B2C health and wellness retailer
Supercharge 1 Take advantage of unprecedented customer attention with increasing ROI on digital media
precision
Capitalize on increasing ROIs Cost Basket
advertising 2 Be ready to lock in low rates as others cut spending
-63%
per ad +23% size

How can we capture

Impressions
and retain the surge 3 Optimize media mix +176%
delivered
+8% ROI
Increase flexibility of budget and shift spend to TV and digital

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
in digital trial and
demand? Invest thoughtfully in demand generation +10%
Conversion
4 Tap into latent demand as regions and categories rebound
rate
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 Sustain
Iterate weekly and adjust budget
Launch pilots Optimize media Embed new ways of
spend at scale working 2x return on marketing investment

Source: IAB survey of media buyers; BCG Case Experience 18

 Evolve pricing to deliver personalized value and serve unique customer segments
B.6
Understand and serve de-averaged customer needs Personalize value
Personalize and Illustrative personas

de-average value Unemployed person stretching his dollar by buying De-average pricing in line with
in bulk and seeking discounts and promos segments—premium to value

Shift from mass promos to personalized

How should we price Frontline health care worker looking for the safety offers, including value-add services
and promote our and convenience of same-day home delivery
Incentivize and reward desired

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
products to serve customer behaviors
unique needs and Millennial working from home who values the ease
of subscription boxes and hassle-free returns Introduce new pricing models aligned
ensure customer to changing behaviors
trust? Retail shop owner looking for flexibility on inventory Create guardrails for short-term
replenishment and lease payments incentives that protect lifetime value

Example | B2C convenience retailer shifts from mass to personalized promotions

Prior to and also during crisis

Shifted budget from Optimized offers to drive +90% +$100M

mass promos to real-time conversion and
vendor-funded 1-1 offers engagement

Offer redemption Incremental

vs. last year revenue

Source: BCG Case Experience 19

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

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Advanced Digital Scalable Tech Innovation
Analytics Experiences Architecture Mindset

Build advanced analytics capabilities Scale up e-commerce and Leverage the power of data and Upskill human capital to
(including Lighthouse) to use high omnichannel capabilities; technology to simplify data and establish a mindset for
frequency data to sense demand invest in personalization and application landscape; aid scale- innovation and agility to
shifts and consumer sentiments digital sales and marketing up of customer activities online secure and grow top line

Source: BCG 20
Guide to building an innovation mindset for organizations

Carve out time for To see the big picture, stand back and reflect; create a rhythm of action and
reflection reflection in business

Ask active, open Prompt questions that drive exploration of fresh ideas and approaches that
questions can bring creativity

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Allow yourself to be Create an agile environment that allows for practice of imagining and
playful improvising; loosen up from regular, goal-driven approach
For more detail,
Set up a system for Facilitate collective imagination by creating forums for people to refer to the article
sharing ideas communicate without hierarchy
We Need
Seek out the anomalous Look externally to solve tough new problems; examine accidents, anomalies, Imagination Now
and unexpected and particulars More Than Ever

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

Imagination feeds on aspirations and aggravations (give people grounds for

Stay hopeful hope, imagination, and innovation)
21
Source: Reeves M, Fuller J. We Need Imagination Now More Than Ever. HBR, Apr'20
1 Guide for leaders
Sensing consumer behavior and seizing demand shifts

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
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
 ~2.1M reported recoveries1 globally so far; EPIDEMIC PROGRESSION &

case-doubling rate improves to 35 days VIRUS MONITORING

As of 22 May 2020

UK
24th Apr'20 8th May'20 22nd May' 20
France Italy
Spain
USA China Japan
Iran
South
India
Korea
21
8 29
12 18
35

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

# of days of doubling2 the cases globally

793k 1,322k 2,057k

(28%) (34%) (39%)
Days of doubling cases:
Total # of recoveries (as % of confirmed cases)
0-3 days 3-6 days 6-14 days 14-30 days >30 days

185 5.2M 338k

41
55 51 71
67

[∆2%]4 [∆1.4%]4
Countries with cases3 Confirmed cases globally 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 23
Sources: Johns Hopkins CSSE; Our world in data; WHO situation reports; BCG
As countries move into Fight phase, several have started to see EPIDEMIC PROGRESSION &
VIRUS MONITORING
decline in number of daily cases
As of 22 May 2020 Non-exhaustive

Several countries increasing doubling rate... ...driven by decline in number of daily cases
Flatten Daily cases (seven-day moving average)
Daily growth rate of total cases (seven-day average) for countries2 with doubling rate > 21 days
7% 70,000
Rates improving from top to bottom

Chile
Brazil

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
6% 60,000
Kenya South Africa Cases doubling:
India
14 days
5% Argentina Mexico 50,000
Egypt US
Colombia
Nigeria
4% Cases doubling: 40,000
Russia 21 days
Canada
3% Algeria 30,000 Spain
Ghana UK
2% Singapore 20,000 Italy
Canada Iran
Sweden US
Morocco Germany
France
1% China Belgium UK 10,000 Germany
S Korea Japan France Italy
Australia Austria Spain Iran
0% 0
Fight 1,000 10,000 100,000 1,000,000 01 Mar 13 Mar 27 Mar 10 Apr 24 Apr 08 May 22 May
Cumulative number of confirmed cases (log scale)
North America Europe Asia1 South America Africa North America Europe Asia1 Africa

1. Includes Middle East & Australia 2. Countries selected from the chart on the left
Source: Johns Hopkins CSSE; Our World in data; BCG 24
Some countries currently have cases doubling under 21 days; EPIDEMIC PROGRESSION &
VIRUS MONITORING
strong monitoring essential in the next few weeks
As of 22 May 2020 Non-exhaustive

Some countries currently have high case growth rate... ...driven by increase in number of daily cases
Flatten Daily cases (seven-day moving average)
Daily growth rate of total cases (seven-day average) for countries2 with doubling rate < 21 days
7% 70,000
Rates improving from top to bottom

Chile
Brazil

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
6% 60,000
Kenya South Africa Cases doubling:
India
14 days
5% Argentina Mexico 50,000
Egypt
Colombia
Nigeria
4% Cases doubling: 40,000
Russia 21 days Mexico

3% Algeria 30,000
Russia
Ghana
2% Singapore 20,000 India
Canada Iran
Sweden US
Morocco Germany
1% China Belgium UK 10,000 Brazil
S Korea Japan France Italy
Australia Austria Spain
0% 0
Fight 1,000 10,000 100,000 1,000,000 01 Mar 13 Mar 27 Mar 10 Apr 24 Apr 08 May 22 May
Cumulative number of confirmed cases (log scale)
North America Europe Asia1 South America Africa North America Europe Asia1 South America Africa

1. Includes Middle East & Australia 2. Countries selected from the chart on the left
Source: Johns Hopkins CSSE, Our World in data; BCG 25
While countries further relax lockdown measures, EPIDEMIC PROGRESSION &
VIRUS MONITORING
continued testing capacity ramp-up is critical
As of 22 May 2020 Non-exhaustive

Daily new cases per million population1

100

Singapore
Brazil

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

60

Sweden

North America
40
UK Canada Europe
Asia2
Belgium South America
20 Mexico South Africa Africa
Spain Germany
Italy Iceland Malaysia Bubble size represents
France Israel South Korea total cumulative cases/M
Switzerland Japan India Australia (Here 2000 cases/M)
0
10 20 30 170
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 26

Source: Our World in Data, Worldometer, BCG Analysis
 Accuracy has critical implications for effective medical response; EPIDEMIC PROGRESSION &

Molecular tests continue to be the "gold standard" VIRUS MONITORING

As of 18 May 2020

Two test types available for Illustration for US: Implications of Accuracy for Covid-19 Testing
Covid-19 that differ in what they Base data: 100,000 tests performed1; 5% disease prevalence
detect and how well they detect Sick patients = 5,000 Healthy patients = 95,000

False Negative Patients False Positive Patients

(sick patients mis- (healthy patients mis-
1 "Gold standard" molecular tests diagnosed negative) Current Molecular "gold diagnosed positive)

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
provide the most accurate standard" test for COVID-19
detection of the virus genetic Sensitivity 98%
material (RNA), typically from 100 Specificity 99%
May detect ~2-4 days before
950
respiratory swabs, and can detect symptom onset
the virus before symptoms appear Antigen tests
(currently under development)
Sensitivity2 80%
1000 Specificity2 99% 950
Misdiagnosed May detect virus on similar
A positive serology
infectious people timing as molecular testing
2 Serological tests test result (true or
do not isolate Rapid finger-stick serology
detect the human immune and propagate
false positive) that
"high quality" suggest an active
response to the virus about one infection further Sensitivity 75% COVID-19 infection
week after symptoms appear; 1,250 Specificity 95% 4,750 will need a
many "rapid" serology tests Detection ~6-10 days after confirmatory
symptom onset
launched vary significantly in molecular test
Rapid finger-stick serology
accuracy "low quality"3
Sensitivity 30%
3,500 Specificity 60% 38,000
Detection ~6-10 days after
symptom onset
1. 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 as 27
100% 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 over
poor accuracy rate”, March 27, 2020) Source: Expert interviews; Popular press articles; Product specifications; BCG
Ramp up of supply chains critical to fully achieve EPIDEMIC PROGRESSION &

molecular testing potential VIRUS MONITORING

As of 18 May 2020 Preliminary, US Example

Current daily MDx testing Capacity Workflow/install

throughput: 200,000+ impact Description base impact Examples
• Enabling all MDx equipped labs to receive
Remote specimens High • Non- /semi-automated
remotely collected samples
Saliva testing High • Validating and scaling saliva testing • Non- /semi-automated

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
(Defense
Capacity unlock levers2

Swab kits Medium • Alleviating swab kit shortages • Non- /semi-automated production)
• Enabling all MDx labs to contract with and
EMR/Contracting Medium • Non- /semi-automated
report results to hospitals
• Non- /semi-automated,
Increased staffing Medium • Adding more lab staff and longer shifts
Near-patient, POC
RNA prep kits Low • Alleviating RNA prep kit shortages • Non- /semi-automated
• Such as, if install all inventory on hand by
Other Low • All
vendors under current supplies constraints
• If install all inventory on hand with all
Instrument inventory Low • All, esp. automated
other levers in place
Other MDx testing technologies • Utilizing other high-throughput and POC
High • All
(e.g. LAMP, TMA, CRISPR) MDx testing technologies beyond PCR

Max pragmatic throughput:

400,000-500,000 Estimated directional impact to currently observed throughput 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 much
smaller and will vary by lever
Source: Expert interviews; BCG 28
Economic forecasts deteriorating for US and Europe, ECONOMIC & BUSINESS
rebound of global GDP not expected before 2021 IMPACT

As of 22 May 2020

GDP growth forecast vs. baseline GDP level forecast2

EOY 2021 vs. EOY 2019
2020 2021
-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
Forecast -5.9% Baseline 2.0% 1.7% 4.7%
US 97-100%

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

1.2% 6.0% 5.8% 9.2%

China 107-112%

-7.5% 1.3% 1.4% 4.7%

Europe 95-99%

1.9% 5.8% 6.5% 7.4%

India 103-111%

-5.2% 0.7% 0.5% 3.0%

Japan 96-99%
Last week's forecast range (only
Forecast IMF (Apr 2020) Baseline IMF (Jan 2020) Forecast range Banks3
shown 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
Group; HSBC Source: German Federal Ministry for Economic Affairs and Energy; Bloomberg; IMF; BCG 29
TSR still not back on pre-crises level across sectors; ECONOMIC & BUSINESS

11 sectors have >10% of companies with high probability of default IMPACT

As of 22 May 2020
Decline reflects economic scenario and consumer sentiment
TSR performance1 Companies with probability of default >15%2
21 Feb 2020 21 Feb 2020 08 May 2020 08 May 2020
21 Feb 2020 22 May 2020
- 20 Mar 2020 - 22May 2020 - 22 May 2020 - 22 May 2020
Pharma -20% -2% 0% 11%
Food/staples Retail -10% -6% 0% 0%
Healthier sectors Household Products -16% -7% 0% 0%

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Health Equipment -31% -8% 0% 0%
Semiconductors -30% -9% 0% 0%
Tech Hardware -26% -10% 0% 0%
Software -30% -12% 9% 8%
Food & Beverage -23% -12% 0% 0%
Retailing -40% -13% 0% 41%
Telecom -17% -14% 0% 15%
Pressured sectors Materials -32% -14% 4% 15%
Prof. Services -30% -15% 0% 0%
Transport -34% -15% 0% 36%
Media -36% -18% 0% 15%
Utilities -30% -19% 0% 3%
Capital Goods -35% -20% 2% 11%
Auto -41% -22% 0% 33%
Financials -35% -23% 0% 0%
Durable Goods -39% -25% 0% 5%
Insurance -39% -29% 0% 0%
Vulnerable sectors Hospitality -44% -32% 7% 36%
Energy -52% -32% 0% 21%
Real Estate -39% -33% 0% 17%
Banks -39% -35% 0% 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 Pos. trend >= 2%
(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 No sig. change
2. Implied by 5-year Credit Default Swap based on median Source: S&P Capital IQ; BCG ValueScience® Center; BCG Neg. trend >= 2% 30
 CONSUMER SENTIMENT
SNAPSHOT

As of 11 May 2020

Respondents who agree that… (%)

"The worst of the coronavirus is still ahead"
100
Consumers

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
continue to 80

display less 60
pessimistic
outlook than 40

four weeks ago 20

0
March 6–9 March 13–16 March 27–30 April 10–13 April 24–27 May 8–11

Italy UK US France 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
With easing of lockdowns, consumers have started CONSUMER SENTIMENT
SNAPSHOT
stepping out for work and essentials
As of 16 May 2020

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% Increase in 20% Increase in

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
movement movement
0% 0%

-20% -20%

-40% -40%

-60% -60%

-80% -80%

08 Mar 22 Mar 05 Apr 19 Apr 03 May 17 May 08 Mar 22 Mar 05 Apr 19 Apr 03 May 17 May

Germany Italy France Norway United States Canada South 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
Shift of spend visible to categories relevant in stay-at-home context CONSUMER SENTIMENT
SNAPSHOT

As of 11 May 2020 US example

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

Mass retail Online marketplace

Short-term COVID-19 impact

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Pharmacy Online grocery
Rapid
Retail electronics Grocery OTC health care
acceleration
Personal care Pet food and care
Packaged food and beverages Organic and fresh foods

Home and DIY retail

Moderate
Tobacco Hobby retail Health, fitness, and beauty
impact
Alcohol

Travel
Rapid Apparel and accessories Restaurants
Public transportation
deceleration Department stores Away from home entertainment
Rideshare

Declining growth Moderate growth High growth

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
In-store purchase frequency has decreased while transaction size CONSUMER SENTIMENT

has increased SNAPSHOT

As of 06 May 2020 US example

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

100 Panic creates a bump Divergent behaviors stick

During the initial outbreak, consumers bought more Afterward, behaviors diverged, with consumers

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
and more often, creating a major spike in sales buying less often, but buying more

50

-50
Jan- Feb- Feb- Feb- Feb- Mar- Mar- Mar- Mar- Apr- Apr- Apr- Apr- Apr-
29 05 12 19 26 04 11 18 25 01 08 15 22 29

Transaction size (average) Total transactions 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
Shoppers preferring strong and integral brands in CONSUMER SENTIMENT

times of uncertainty SNAPSHOT

As of 20 April 2020

Net likelihood1 of buying brands that stood out in a positive way during the crisis (%)
+47%
+40%
+36%
+32% Ø +35%

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
+22%

US UK Germany Italy China

Example: How companies supported society during COVID-19

Protective gear Ventilators Staff Suppliers Return flights

Clothing company Automotive Fast-food chain Natural resources Airline company

started producing manufacturer is lends 1,750 workers company accelerated brought back 90,000
50,000 medical building 50,000- to grocery stores to ~$60M payments to people in 160
gowns and 2.5 30,000 ventilators cope with initial small suppliers by flights, partially from
million masks in per month starting in increase in shopping reducing payment countries not
April 2020 April 2020 demand terms 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
Additional perspectives on COVID-19

COVID-19 BCG Perspectives Selected general publications Selected sector publications

Copyright © 2020 by Boston Consulting Group. All rights reserved. Updated 26 May 2020 Version 7.1.
Edition #6 Edition #5 Marketing & Sales Demand Sensing Consumer Consumer
Restructuring costs, and Revamping COVID-19 Consumer Shining a Light on COVID-19 Consumer COVID-19 Consumer
managing cash and Organizations for the Sentiment Snapshot #9: A Customer Demand During Sentiment Snapshot #10: Sentiment Snapshot: Special
liquidity New Reality Lighthouse to Navigate the the COVID-19 Crisis The Trip Back Feature—Asia-Pacific
New Reality

Edition #4 Edition #3 Revenue Management People & Organization Automotive Retail

Accelerating digital & Emerging stronger from A Revenue Management People Priorities in the How to Avoid the Auto The $2.5 Trillion
technology the crisis Reset in Consumer Ramp-Up and Return to Industry’s Looming Price Opportunity for Grocers
transformation Goods Work War That Are First to the Future

Edition #2 Edition #1 Supply Chain Leadership Technology Healthcare

Preparing for the restart Facts, scenarios, and The New Reality for Chief Communicating Businesses in Asia-Pacific The Timelines and
actions for leaders Supply Chain Officers Leadership During Can Find Resilience and Implications for COVID-
COVID-19 Growth in the Cloud 19 Vaccines

Source: BCG 36
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BCG does not provide legal, accounting, or tax advice. The Client is responsible for obtaining independent advice concerning
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37
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