Connections Series Global Food Retail Barometer,Charting global feedback on e-grocery,DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.,24/08/20 Equity Research Europe,Research Analysts Victoria Petrova 49 69 75 38 2272 victoria.petrovacredit-,Ella Hughes 44 20 7888 8741 ella.hughescredit-,Specialist Sales: Alex Molloy 44 20 7888 2209 alex.molloycredit-,Connections Series The Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross- sector and cross-border thematic insights for our clients.,We publish this presentation to highlight our analysis and summarise global data points on consumer behaviour relevant for the food retail sector. While each country has its own specific characteristics, we think the acceleration of e-grocery could have a similar impact on food retail markets across the globe. We acknowledge the enormous uncertainties, with high volatility in demand, changing cost structure and potential impact from supply chain disruptions. As such, this analysis is on a best efforts basis, and largely reflects our analysts views and judgements as well as management feedback from companies across the globe. This is the second edition of our Global Retail Barometer and we plan to continue to share feedback and analysis for each food retailer under coverage and provide updates as significant developments impact the sector globally. -Your Credit Suisse Global Food Retail coverage team (Victoria Petrova, Onur Muminoglu, Rob Moskow, Victor Saragiotto, A-hyung Cho),2,Charting global feedback on e-grocery,Structural shift into the concept of new convenience: more food to be bought online: COVID-19 has massively accelerated e-grocery growth. While experts opinions vary when it comes to sustainable penetration levels and immediate post-COVID growth, consensus forecasts indicate e-grocery is set to become a bigger channel for food consumption across countries, incomes and demographic segments. Price matters: higher transparency, lower loyalty. We believe that the shift to online allows higher transparency and puts additional pressure on pricing of goods and delivery. Profitability: Automation in fulfillment: Online grocery continues to be dilutive for retailers margins. Testing various fulfillment options and partnerships, choosing between immediate flexibility, capacity and level of automation and innovation would be crucial for retailers next-year performance.,3,Global food retail Three trends that look set to continue beyond the pandemic,Implications for incumbents: Ignoring the online channel would lead to market share losses. Most retailers have experienced massive growth in the online channel and are investing in online operations.,Implications for incumbents: Retailers will have to work very hard to continue to own their sales channels. Cost- efficient cash rich retailers will benefit mid-term. Implications for retailers: Fulfillment market is in its infancy. We believe that manual pick is a temporary solution, which is supported by capacity constraints, while micro- fulfillment centers are likely to serve as the most widely used solution going forward.,Cost, convenience and time to acquire are the main concerns of grocery shoppers during COVID-19 (Source: YouGov Apr. 20),Online grocery habits are here to stay,COVID-19 has introduced new trends, including increased healthy eating and home cooking,Consumers globally are cooking more at home than before COVID-19 (Source: Nielsen April 2020),80%,74%,64% 60%,54% 54% 51% 49%,45% 45% 43% 41%,29%,90% 80% 70% 60% 50% 40% 30% 20% 10% 0%,More,Same as before COVID-19,Headline online grocery statistics and commentary The longer the COVID-19 environment extends, the more embedded new habits will become Nielsen More than half of US consumers (51%) who report cooking more during COVID-19 will continue to do so when the crisis ends Hunter consumer survey Online grocery growth increased to 92% in July and although restrictions have eased, 1/5 households still made an online order in 4 weeks to 12th July - Kantar Online grocery has attracted a new group of customers, particularly older demographics, some of whom will continue using online services now that they have the enjoyed the convenience that home delivery provides - Kantar,53%,49%,37%,36%,23%,19%,15%,9%,6%,70% 60% 50% 40% 30% 20% 10% 0%,60%Britons with children under 18,Britons without children,4,Online food disruption We have run several conference calls during the past few months covering consumer behavior i