Bricks-and-mortars aim to gain on Amazon pain

Amazon (AMZN), the golden child in an industry full of retailers duking it out for single-digit comparable sales growth, raised eyebrows with its disappointing sales guidance for the holiday season.

The online giant is in many ways facing a different environment than it did last Christmas, as bricks-and-mortar stores continue to evolve their Web capabilities and chip away at Amazon's price advantage. Along with stiffer competition, Amazon is also vulnerable to the hesitant consumer who, despite a slew of economic tailwinds, is still reluctant to spend.

"This holiday versus a year or two ago, Amazon, in terms of online sales, is facing a much higher competitive bar," said Craig Johnson, president of research firm Customer Growth Partners. "Bricks-and-clicks store-based retailers have stepped up."

Since last season, retailers have taken aim at Amazon by improving their online shopping capabilities and using their store networks- something Amazon lacks -as a means for an advantage. Wal-Mart (WMT) has been investing heavily to improve its online résumé, and recently announced plans to boost its investments in the category from $1 billion to between $1.2 billion and $1.5 billion next year.

Read More Who needs Black Friday? Retail cutting prices now

Similarly, Target (TGT) just announced that it will offer free shipping for all its online orders until Dec. 20, without requiring a minimum purchase. And compared to last season, a number of major retailers-including Macy's (NYSE:M) and Gap (GPS)-have either launched or expanded on their programs where shoppers can buy online and pick up in store.

According to a recent study by think tank L2, which analyzed 100 retailers, the number of aspirational retailers (a category that's made up of such names as Banana Republic and Talbots ) offering in-store pickup doubled in the previous year, to 24 percent.

It's an initiative that shouldn't be taken lightly. According to Forrester analyst Sucharita Mulpuru, 30 to 50 percent of retailers' online orders sometimes come via this service. What's more, upwards of 40 percent of U.S. consumers have used in-store pickup.

Read More Has the 'funk' passed? Retail giving mixed signals

"[Amazon is] in an environment where retailers are catching up," Mulpuru said. She pointed to the fact that, in the most recent quarter, Wal-Mart's online sales grew at a faster pace than Amazon's, which "means that they've been picking up [market]share."

One possible reason for Amazon's slower sales growth is that it's starting to lose its price advantage relative to competitors. A recent study by pricing firm 360pi and Wells Fargo compared 100 items at Amazon to nine traditional retailers, including Wal-Mart and Target. Although Amazon is still widely the price leader, Wal-Mart and Target had lower prices in the clothing and shoes, electronics, housewares and health and beauty categories.

Read More Amazon doesn't always offer the best deals: Study

At Wal-Mart, for example, prices have gone from an average 1 percent lower than Amazon's, to 10 percent lower in the most recent quarter. Macy's prices were only 1 percent higher than Amazon's in apparel and shoes, compared with 17 percent a year ago.

Earlier this year, Amazon boosted the price of its Prime membership to $99 from $79. Although this likely wouldn't dissuade the company's core users from the service, it might discourage people who were considering signing up, said Ken Perkins, founder of Retail Metrics.

"I really am baffled by ... anybody who thought that Amazon's chances for unlimited earnings potential was so large," Mulpuru said.

That's not to say that Amazon's woes are in no way tied to the broader economy. RW Baird analyst Colin Sebastian said in an email that he doubts Amazon is losing share to bricks-and-mortar competitors that have stepped up their online game, as it isn't the first time there's been talk about competitors improving their capabilities.

Instead, in a note to investors, he listed sluggish device sales and certain macroeconomic headwinds as two reasons behind its revenue guidance of 7 percent to 18 percent growth in the fourth quarter.

Perkins pointed to muted wage gains among the lower-earning two-thirds of consumers as having the potential to dampen holiday sales. Johnson cited slowed online sales growth as another issue. The segment used to easily post double-digit gains but last year slipped to 8.6 percent growth, according to the National Retail Federation.

"When you get that big, it's hard to repeat the double-digit growth rates year over year," Johnson said. He added one thing that could marginally boost online sales is the Ebola situation, if it becomes more dire in the U.S.

Read More Wall Street may finally be giving up on Amazon

The National Retail Federation's Shop.org unit predicts online sales will grow 8 to 11 percent in the November-to-December period.

To capture a share of that pie, Perkins predicts more retailers will follow Target's lead by offering free shipping and other promotions "as they grow increasingly desperate" to compete with Amazon.

Analysts agreed that Amazon remains the dominant player online, with Johnson predicting the retailer's growth in sales this holiday will be twice that of the online segment. Mulpuru pointed to Amazon's robust customer data as an advantage over traditional retailers that are newer to the game, and said that until Wall Street puts enough pressure on the company to boost its margins, it will continue to have a leg up.

"Let's call a spade a spade. One of the biggest reasons that they've grown is because they've been increasingly aggressive from a shipping and pricing standpoint," she said. But as that advantage starts to go away, so will its competitive edge.

"I absolutely don't think that the last page has been written."