DORTMUND (German). Dec 11: Don't be fooled by the traditional Christmas market outside the main entrance. Behind the pine-decked huts selling gingerbread cookies and steaming cups of mulled wine is something decidedly unconventional for Germany: Wal-Mart.

The world's largest retailer has set out to conquer Europe's biggest market, and all signs so far — from the steady stream of cart-wielding customers to rounds of supermarket price wars — indicate it has shaken up a hotly competitive market.

German retailers may snicker at Wal-Mart practices like the employee cheer-sounded in English: "Give me a W, give me an A... Who's No. 1? The customer always!" and Sumble about Wal-Mart prices ey suspect are below cost, something that's illegal in Germany.

But they also are scampering to slash prices and improve their own notoriously poor reputation for customer service.

Wal-Mart is a strong com-Cany. no question." says Wil-elm Schulte, director of the retailing association in Dortmund. where Wal-Mart opened its flagship supercenter Aug. 31.

Since Sam Walton opened the first Wal-Mart in 1962 in Rogers. Arkansas, the company has expanded aggressively in the United States. Latin America and Canada. But it didn't set its sights on Europe until December 1997. when it, took over the German Wertkauf group of 21 stores. A year late it added 74 Interspar hypermarkets.

Then followed months of remodelling — wider aisles, better lighting, more checkout counters — hiring more staff and teaching them the Wal-Mart culture^ before the last of the 95 stores was rechristend! Wal-Mart in September.

Germans used to cramped stores, rude sales clerks and long waits at the checkout are responding.

'It takes us 15 minutes to drive here, but it's worth it," said Wal-Mart shopper Thomas Kalkhof. 'The prices are low. the employees are friendly, you can get information from them.'

Yet whether long-term success will follow is unclear. Other international chains have sought to establish footholds in Germany, an enticingly wealthy land of 80 million consumers .and stumbled despite deep corporate pockets.

Part of the problem is that profit margins are thinner, due to higher labor costs and a greater density of stores per shopper, meaning tougher com-

petition. Whereas in Britain, supermarkets can clear a net profit of 6 to 8 per cent of sales, the margin is 1 per cent nr less In Germany.

"Whoever-believes they can really clean up quickly In the German market Is mistaken." Schulte says, citing the examples of chain Toys R’ Us and Britain's Marks and Spencer, which closed four of its six German stores last summer.

Conscious of such missteps. Wal-Mart Germany executives say they have adapted rather than copied the US formula so they could better cater to local tastes.

The meat counter Is weighted

toward hefty pork shoulders and sauerbraten. Freshly baked soft pretzels-share shelf space with sugared doughnuts. McDonald's Is up front, but there's a cafeteria in the back for those who prefer Wurstbrot-open-faced sandwiches with sausage and butter.

Even the pictures on Wal-Mart's brand of pet food were changed: Sam Walton's English setter was replaced by a terrier, Plastic shopping bags are free at the checkout — an oddity here hut customers are asked if they want to pack their purchases themselves or let the clerk do it.

— AP Feoture