CORONA DEL MAR, CA –Macy’s decision to shutter 100 stores—the second round of closings in as many years—is another chapter in the retailer’s recent woes. The chain isn’t alone. Recent moves by Kohl’s, JCPenney, Walmart, Ralph Lauren and Aeropostale suggest Macy’s story is indicative of the entire sector. And while the usual suspect of e-commerce gets blamed, there are other factors to consider, says Carlos Lopez of Hanley Investment Group. caught up with the SVP at Orange County-based company to get his bird’s-eye view in this EXCLUSIVE interview for the ICSC Western Conference and Deal Making event. How much of the recent store closings are a result of the rise in e-commerce?

Carlos Lopez: At first glance, it would be easy to credit the tectonic shifts occurring in the retail industry on the rapid growth of online retailing and e-commerce, and in fact the Commerce Department reported sales of non-store retailers—e-commerce retailers like Amazon—increased by 1.3% for the month of July. But I see a different paradigm occurring in consumer behavior. Even prior to the Great Recession, consumer spending was moving from the purchase of apparel and goods to services. Shoppers are choosing to spend their discretionary dollars on entertainment, travel and leisure. According to First Data Corp., travel expenditures rose 8.6% in the month of July over the previous year. Have there been noticeable winners and losers among different property types given the consumer changes?

Lopez: Multi-tenant retail (neighborhood, power and community) shopping centers with food and grocery anchors, drug stores and dollar stores offering an array of daily needs and essential services have experienced increasing occupancy levels over the last number of years. We’ve also seen strength with those developments anchored by discount and off-price apparel chains such as Marshalls, T.J. Maxx, Ross, Nordstrom Rack or warehouse stores.

Two property types that have been most impacted are regional malls and the districts commonly referred to as “high street” retail. Both have long been perceived as being the most desirable retail locations, with strong emphasis on apparel and department stores as anchors. Instead, they are experiencing increased vacancy and downward pressure on rental rates as retailers attempt changes in response to new consumer buying patterns. Presently, the most popular high street districts of New York City such as Fifth Avenue, Times Square, SoHo and Madison Avenue are reporting increased vacancies with downward pressure on retail rental rates.

On the West Coast, districts catering to the luxury retail sector have experienced less of an impact from e-commerce, although we’ve seen market issues similar to New York’s. Landlords in California high street districts like Walnut Creek, Old Pasadena, Abbot Kinney Boulevard in Venice, Robertson Boulevard and Malibu, have seen a shortage of retailers willing to pay top dollar for rental rates. What do you see on the horizon for the industry?

Lopez: Going forward, the trend of “right sizing” will likely be with us for a while as tenants seek to evolve in this rapidly changing environment and look to deliver the best way to use a brick-and-mortar format to provide both experiential shopping experiences and the optimal square footage.

For landlords, understanding the shifts in consumer preferences will help them to position their retail properties to minimize vulnerability. For investors, understanding the new environment will help them determine which properties are less vulnerable to market changes.

Visit Hanley Investment Group at Booth #1521 at ICSC Western Conference & Deal Making in San Diego.