What to Buy and Not Buy at Walmart

CBS MoneyWatch

Despite (or perhaps because of) the fact that Walmart (NYSE: WMT - News) is the nation's largest retailer, there are plenty of people who wouldn't be caught dead in one. To these folks, Walmart conjures images of a rapacious juggernaut of stadium-sized stores offering low-quality merchandise, spotty service, and mistreating employees and the environment — while driving small local retailers out of business.

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But many of those misgivings are starting to fade, partly as a result of some well-timed improvements to the company's product line-up and its environmental record. What's more, there's nothing like the worst recession in 80 years to nudge "low prices" a little higher on the collective priority list. And while Walmart may not be making its employees rich, the chain handed out very few pink slips in the downturn and remains the country's largest private employer.

To be sure, there are plenty of reasons to remain wary of the retail behemoth. Whether you are concerned about the threat to a downtown business district, object to the retail culture, or just have a mental picture of the Walmart shopper that you can't square with your own self image, it may not be for you. But it's worth keeping in mind that, when it leverages its enormous scale for good, Walmart can make a difference in a hurry. It's one thing when a boutique sells fair-trade coffee, but when Walmart gets into the game, a lot of sustainable farmers benefit. Here are five product categories where you can comparison shop in good conscience at the nation's "low-price leader."

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1. Moderately Priced Consumer Electronics

Dying to get the latest hi-definition TV from Vizio or Viore? We thought not. Those low-priced brands are what Walmart has focused on in the past, but recently the retailer has expanded its offerings to include high-def TVs from top makers such as Samsung (Other OTC: SSNLF.PK - News), Sony (NYSE: SNE - News), Philips (NYSE: PHG - News), and Sharp (Other OTC: SHCAY.PK - News). It also now offers digital cameras made by the likes of Nikon and Canon.

Walmart still isn't the best place to shop for a top-of-the-line television or digital SLR camera. But its focus on bringing in more big brands has made it an attractive option for shoppers seeking consumer electronics in the sub-$1,000 price range. This year, for example, some WalMart stores offered a 50-inch Samsung plasma television for less than $700 during the Thanksgiving holiday weekend.

What Walmart doesn't have is an army of educated sales people ready to explain all the settings on the back of that SLR or the subtle differences between a high-def TV with a resolution of 1080i versus one with 1080p. But such service has become less important now that 90 percent of consumers turn to the Internet for detailed product reviews, says James Russo, Nielsen's vice president of global consumer insights.

"Consumers will do their research outside the store," says Russo. "So if Walmart has the right selection and price point, consumers will go there.

2. Smart Phones

In the past year, Walmart has beefed up its offerings of higher-end cell phones, especially Blackberries. This is good news if you've reached the end of your phone contract and are looking to compare new phones and carriers all in one place, since Walmart sells phones and service plans from each of the four largest U.S. carriers: Verizon (NYSE: VZ - News), AT&T (NYSE: T - News), Sprint (NYSE: S - News), and T-Mobile (NYSE: DT - News). So if you want to see how T-Mobile's G1 phone, which uses Google's Android operating system, matches up against Apple's iPhone, Walmart is the place for you. You can't do that at an AT&T store, or even at one of Apple's fancy boutiques.

3. Coffee

While Walmart has been criticized in the past for being more concerned with price than environmental or labor issues when sourcing its goods, one area where it's improving its record is with coffee. This year, the company partnered with TransFair USA, an independent certifying agency, to offer fair trade-certified coffee in its Walmart and Sam's Club stores. The coffee is sustainably grown by farmers who receive a living wage and is thus more expensive than competing coffees — roughly $5.88 for a 10 to 12 ounce bag, compared with less than $5 for supermarket brand Eight O'Clock Coffee. But it tastes better (or at least it should), and by selling fair-trade coffee, Walmart vastly expands the market for such goods.

Carmen K. Iezzi, executive director of the Fair Trade Federation, a North American association for such products, says Walmart's expansion of fair trade certified items like coffee was promising, although she cautioned that it's too early to tell how much impact Walmart's efforts will have. Still, coffee is a good start. "When any major corporation begins to move in the direction of more sustainable practices, that is a positive sign," says Iezzi.

4. Video Game Bundles

Of course, Walmart's primary appeal has always been its low prices, but it makes sense for shoppers to do a cost/benefit analysis: Is it worth it to save $10 on a book, when you could be supporting an independent bookseller instead? On the other hand, you can save a lot more money if you're in the market for video game systems, which Walmart often bundles with starter games. For example, Walmart was recently selling the Xbox 360 Elite gaming system, along with two games, including this season's blockbuster title, Call of Duty: Modern Warfare 2, for just $259. The game console alone sells for upward of $249 at stores such as Sears, while Call of Duty typically retails for $60. And buying video game consoles and products at Walmart is arguably a guilt-free purchase. After all, Sears (NasdaqGS: SHLD - News) isn't known for standing up against suburban sprawl.

5. Laundry Detergent

When it comes to the environment, Walmart's suppliers have often fallen far short of best practices. Now the chain is trying to clean up its act by offering more eco-friendly products. One area where it's done the most is laundry detergent. The company recently switched to selling only concentrated laundry detergent in its U.S. stores — these products use up to 50 percent less packaging and require less fuel to transport than the earlier versions. Once again, scale matters: Walmart has a serious carbon footprint, so cutting laundry detergent containers by half can have a big impact.

Walmart has taken steps to combat phosphates, which pollute the water and lead to an explosion of the algae population that destroys fish habitats and plants. The company already says there are no phosphates in detergent it sells in the U.S., and earlier this year, it announced plans to choose more eco-friendly suppliers for the laundry and dish detergent it sells in its Americas region, cutting phosphates by 70 percent by 2011. The Americas region includes Canada, Mexico, and countries in Central and South America.

And Walmart has unveiled broader initiatives to improve its eco-image. In July, the company began developing a sustainability index that will eventually rank all of its suppliers and products based on their environmental impact. "Walmart is taking some important steps, although they've still got a long way to go," says Honor Schauland, a campaign assistant at the Organic Consumers Association, a Minnesota-based consumer advocacy group.

Walmart didn't become the world's largest retailer by accident. Executives in Bentonville, Ark., are well aware that stocking sustainable products was a good way to attract a more affluent consumer. And those consumers like low prices on recognizable brands as much as anyone, especially in the current economy, says Doug Conn, a managing director at Hexagon Securities who focuses on the retail sector.

"They have picked up on trends like organics and natural products, and that has helped get new customers," says Conn. "But the key theme is that customers are more value-oriented than they have ever been this holiday season, and Walmart is the default place to go for low prices."

In other words, new customers are coming for the deals. But if they shop the categories mentioned above, they can feel good about being thrifty without worrying that they've abandoned their ideals just to save a buck.

What Not to Buy at Walmart

While Walmart has recently burnished its reputation among upscale shoppers, there are still some product categories where you'd be better off going elsewhere — either because you're straying beyond Walmart's core competency, or to avoid supporting the giant retailer's bad behavior. Here are three of them.

1. High-End Electronics

Though Walmart has expanded its selection of name-brand electronics, it's still focused on value-oriented products in the sub-$1,000 price range. And its sales staff tend not to be experts in the finer points of multimedia interface. So if you want to splurge on a top-of-the-line television or digital SLR camera — and get the accompanying level of service and accessories — you'll want to visit a specialty electronics store. Best Buy (NYSE: BBY - News), for example, has a customer support team (the Geek Squad) capable of explaining why, for instance, you may need a television with several HDMI ports.

2. Books

This year, Walmart slashed prices aggressively to establish itself as the low-price leader for best-selling books. The store cut the cost of popular novels such as Stephen King's Under the Dome by 70 percent to $13.99, sparking a price war with Amazon (NasdaqGS: AMZN - News).

The Walmart/Amazon rivalry translates into incredibly low prices for consumers on some of the most popular book titles. But Walmart's prices come at a cost, say local business advocates. In the long-run, such deep discounts can drive independent booksellers out of business. And without these stores, consumers will have difficulty finding all but the most well-known authors, says Stacy Mitchell, senior researcher with the Institute for Local Self-Reliance, a non-profit that advocates for local businesses.

3. Wood Furniture

Despite Walmart's increased focus on sustainability, the retailer has a long way to go in the furniture category. In December 2007, an environmental group published a report tracing furniture from Walmart suppliers to wood illegally logged in protected Russian habitats for Siberian tigers and other wildlife. Several months later, Walmart promised to investigate its suppliers and joined the Global Forest & Trade Network, an organization dedicated to eliminating illegal logging. Environmental activists have applauded Walmart's promise to purge environmentally rotten wood, but Walmart could take until a self-imposed deadline of 2013 to phase out the products. Until then, consumers can't be certain that Walmart's wood furniture comes from well-managed forests.

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