German consumers might expect to be treated like royalty given the poor state of domestic demand in Europe's largest economy.

However, in a country where customers rarely feel like kings, the lack of a consumer and service culture is threatening to stall the country's recovery before it has even begun.

Most residents have their own horror stories: Being marched out of a café because one's child is crying, ordered to put away one's sketch book at an art exhibition, or told to enter a shop through a different door.

Shop staff busily pack shelves to avoid eye contact, rarely greet customers with a smile, and often seem indifferent about whether they make a sale. Of course there are exceptions, but even Germans admit they are not a nation of shopkeepers.

"People say the problem is just in the east, as a vestige of the communist era, but it's really a problem throughout Germany of not knowing how to serve customers," said economics professor Friedrich Sell, who believes Germany must face up to a future as a service society or risk economic failure.

The picture is certainly not bright at the moment. Germany's economy is sharply split between a booming export industry and a depressed home market.

Retail sales fell three per cent during May after an uncertain start to the year. Germany's HDE retail association said June was little better.

"We haven't seen such a consumer crisis before. We've had two and a half years of decline after 10 of stagnation," said HDE spokesman Hubertus Pellengahr.

Economists put the wretched numbers down to consumer fears about the hesitant recovery, rising unemployment and uncertainty over the course of Chancellor Gerhard Schroeder's reforms.

Increased health charges and higher tobacco tax have also taken their toll.

By contrast, high unemployment in France has not deterred shoppers there pumping cash into the economy, household spending recording its biggest annual rise for four years in April.

Germans have reason to be concerned, but some observers say that worrying has become a national pastime. Memories of decades of war and economic upheaval have also a produced a frugal and cautious spirit.

"They do hold back until typically a good half a year after the economy has shown signs of recovery," Mr Pellengahr said.

Prof. Sell, who teaches at the Army University, argues that Germans must however face up to a future in which service industry, and a culture of service, become ever more important.

German manufacturing jobs are already being lost as firms relocate to lower cost countries. Growth industries such as gene technology cannot compensate, but a burgeoning service industry could take up the strain.

There are already government plans to force the long-term unemployed to accept jobs from the start of 2005. The theory is the out-of-work professor would have to accept a job in a fast food chain. Andreas Rees, economist at HVB Group, says that only addresses one side of the issue.

"We have well over a million long-term unemployed, but there is a minimum wage which prevents them from getting a job."

Prof. Sell agrees that wages in many service jobs are too high, linked to productivity in manufacturing, rather than their own lagging performances.

But there must also be a change in workers' minds, especially as competition in Europe intensifies.

"There is a lot of pride over for products with the 'made in Germany' label. In the service industry, Germans have the qualifications, but the jobs don't carry the same level of standing. However, that's where the future lies," he said.

Prof. Sell and others acknowledge there is a challenge to break a vicious circle of poor service and low expectations.

The land of poets and thinkers is also the home of the discounter. Aldi and similar low-cost stores corner over 35 per cent of the grocery market. Electronics chain Saturn advertises with the slogan "Stinginess is cool".

A study by consultants McKinsey two years ago showed German shoppers were far more influenced by price than the French or British. For groceries, 42 per cent of Germans emphasised price and just 13 per cent concentrated on quality and service.

Wal-Mart does not employ "greeters" at its German store entrances, nor apply its "Ten-foot-rule" that requires staff to attend to customers close by. Observers say this is because Germans can feel harassed if staff approach them.

Metro AG, the world's fourth biggest retailer by sales, comments that Germans would not pay higher costs for plastic bag packers, yet still believe service is important.

"There is some exaggeration, but there's certainly some ground to make up," said Metro spokesman Albrecht von Truchsess.

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