Johannes Faul: Hi, my name is Johannes Faul. I cover the retailing sector at Morningstar. Today, we want to highlight a theme that has been emerging in the retailing sector and that's the very, very strong online sales growth that we've been seeing. And that growth across online has also happened in food retailing.

Now, Woolworths and Coles are not only the leaders in total food sales in Australian food retailing, but they're also the leaders in online food retailing. However, the strong growth rates present not just opportunities for those two companies, but also risks.

Firstly, to the opportunities. We think that given that they are so far leading in their online capabilities ahead of Costco and IGA Network, and Aldi, the discounter, doesn't even have a transactional website that they'll be able to maintain their market shares comfortably with that lead in online.

The risk really lies in the lesser profitability of those online sales. Thinking about having to pick and fulfill those orders, even if it's click and collect, and then on top of that, some sales are also delivered which is also costly. And we expect all up those sales to dilute margins and weigh on profitability.

So, in the near term over the next year or two, where we expect strong online sales growth for Woolworths and Coles, it will be tricky for them to manage that against slowing sales growth overall, lower brick and mortar sales growth in store while the online sales channel grows strongly. However, in a recessionary environment, discounters like Aldi do really, really well. In 2008, Tesco famously said they're not too worried about the discounters’ day in the sun. Well, that was when their market share peaked back then. And we think that the online channel presents a great opportunity for Woolworths and Coles to protect their market share against Aldi.