Forget retail goods, it’s all about services

A dismal quarter for retail earnings made one thing clear, says Dana Telsey, founder and CEO of Telsey Advisory Group. Consumers are spending their money on experiences, not things.

"It's a different focus for where consumers are spending their dollars today," Telsey told CNBC's "Closing Bell" Wednesday.

Americans are using those dollars on gym memberships, travel, salons and lodging, she said. But this doesn't mean the end of brick and mortar. This shift in activities could push foot traffic to malls, Telsey said. Retailers are also selling more online goods but she it doesn't have to be "one or the other."

"Brands certainly have the opportunity to continue to flex their muscle to continue to have goods offered online and in stores," she said. "Look what's happening with e-tailers opening stores and retailers going online."

Tiffany is one retailer in particular that suffered this week. The high-end jeweler reported its biggest drop in quarterly sales since the peak of the global financial crisis. Tourism, slowed by a strong dollar, weighed on revenue.

"You're seeing a weakness in tourism definitely impact sales of companies that have a focus in flagship cities," Telsey said. "We heard it from Macy's, we heard about it from Ralph Lauren, and we heard it from Tiffany, too."

Despite weakness for Tiffany this quarter, Telsey did point to a stronger-than-expected gross profit margin, which expanded to 61.2 percent.

Meanwhile, she said, companies like LuluLemon and Kate Spade are thriving. Telsey highlighted Kate Spade in particular, which reported comparable sales growth of 19 percent in the first quarter.

"Some of the higher priced items seem to be working," Telsey said. "Inventories are getting back in balance, we're seeing some gross margin improvement."