Glenn Freeman: For this week's Morningstar Minute, I'm joined by equity analyst Johannes Faul. And we are discussing the retail sector.

Johannes, thanks very much for your time today.

Johannes Faul: Thanks for having me Glenn.

Freeman: And Johannes just first up, we are now past the mid-point of January and we've spoken a lot in the past about the impact that Amazon is going to have on the retail sector. Can you just cover up for us what your outlook is now, now that we are into 2018?

Faul: Absolutely. So, our view, our outlook for the retail sector coming up for 2018 is that Amazon is really going to steal the show in terms of news flow and that’s where a lot of focus is going to be. Our view always has been that impact of Amazon in the near term is going to negligible. Current fiscal year is still going to be a good year for the Australian retailers. But as Amazon builds scale and roles out its services, impact is going to be more meaningful. So over the next three or four years Amazon's going to have a significant impact on the local names.

Freeman: And two of the biggest players out here in this space are Woolworths and Wesfarmers, they are just two of the companies. But can you just talk us through how much impact Amazon is having on them and maybe some of the others.

Faul: That’s actually an interesting question, because we also differentiate which retailers are more and less exposed to Amazon and categories such as groceries, hardware, but also things like auto parts are in our view defensive against online players, pure online players such as Amazon. So, for Woolworths and Wesfarmers, Wesfarmers has large hardware business too in Bunnings. We see those two companies fairly insulated at least from the medium term to the impact of Amazon.