Washington Post Staff Writer

WILLIAMSBURG -- The biggest tourist attraction in this historic area is a collection of makeshift buildings, described as a "bizarre bazaar" and the "kitsch capital of America," with the somewhat misleading name of the Williamsburg Pottery Factory.

Since its humble beginning nearly a half century ago as a roadside kiln, the pottery has grown into one of the largest family-owned, single-location retail businesses in the country, with annual sales of about $60 million.

The Williamsburg Pottery Factory sprawls over 200 acres and occupies 32 buildings, with more than 1.5 million square feet of selling space under roof (compared to 1.25 million square feet at Potomac Mills mall), and attracts 5 million visitors annually (about as many as nearby Colonial Williamsburg and Busch Gardens combined).

The merchandise runs the gamut from garish schlock, such as a rusting two-story tall suit of armor and hordes of velour tapestries, to luggage, baskets, rugs, model trains, pet carriers, sporting goods, wine, cheese, fine china and furniture.

The complex is difficult to describe; it needs to be experienced.

It is the embodiment of its founder, James E. Maloney, a self-educated, 75-year-old Irish American whose merchandising genius has befuddled consultants and academicians, and been envied and copied by other entrepreneurs.

Paul Verkuil, president of the nearby College of William and Mary, said business consultants from Harvard and elsewhere, after touring the pottery complex, invariably exclaim, "We don't know what you're doing, but keep on doing it."

"Part of the charm," said Frederick C. Maloney, president and son of the founder, "is the flea-market architecture. People expect low prices. It looks haphazard. Dad never had a plan for the place. It just grew."

"We've accidentally built something that is interesting," said the senior Maloney, pointing to the crowded, 8,000-vehicle parking lot speckled with dozens of chartered buses.

"People aren't going to drive down here from Baltimore to go to a K mart. They come here for our uniqueness, especially for the things we make ourselves. They like to see the workshops."

A survey of last year's shoppers -- and they are shoppers, often staying all day before leaving with hundreds of dollars of merchandise -- found that nearly 10 percent came each from Maryland and Pennsylvania, 5 percent from North Carolina, and 3 to 3.5 percent each from New Jersey, New York and Ohio. Forty-eight percent were Virginia residents, many of them regulars who live within a 100-mile radius.

For years, the pottery was a word-of-mouth, cash-and-carry business, both for its customers and its owners.

Until recently, the buildings' floors were dirt (until ruts made it impossible for the secondhand grocery carts to negotiate them) and the parking lots were unpaved; purchases still are wrapped in old newspapers.

As recently as 1980, Maloney paid cash for the pottery's largest structure, the $9 million, 360,000-square-foot Solar Building.

"I never ran a cash register or added up the day's take," he said during a stroll around the midway-like outdoor sales areas. "I figured if we sold what people wanted, at a fair price, the rest would take care of itself."

Today, the pottery sells 60,000 items from around the world, much of it selected by family members on shopping expeditions.

Among the most popular departments are those where customers can see crafts people at work, which, in addition to pottery, includes flower arranging, woodworking, candle-making, picture framing and a calico corner.

The hottest-selling item grew out of one of Maloney's mistakes. Maloney hired two Korean men to repair watches, but when it became clear that impatient shoppers did not want to wait around that long, Maloney hired their wives as flower arrangers. Now the pottery employs 60 Korean artisans who arrange and sell silk flowers, which account for nearly 10 percent of all sales.

Other specialties are tropical plants, grown on the pottery's 175-acre farm in Florida, and a myriad of Mexican products, assembled at the pottery's warehouse in Laredo, Tex., and shipped to Williamsburg in the company's fleet of trucks.

The secret of his success, Maloney said, is to "go to the source. We're not magicians. We can't sell it cheaper if we don't buy it cheaper, and the way you do that is find who makes it and buy it from them."

Maloney's searches for the source are legendary: When he wanted to sell onyx figurines, a New York distributor quoted him a price of $5 a piece. He traced the product to a small Mexican village, where the artisan charged him 75 cents each.

He once trained a Mexican tour guide to spot bargains for him, and calling on his potting skills, has shown villagers how to make specific pieces of pottery, and then buys their entire production.

The Far East is another favorite source, but several trips to China have disappointed Maloney, because "you can't get to the source. You have to deal with the government."

"I pray every night that China remains communist," he joked, because "if they ever became capitalists, they'd kick our butts."

Could the pottery expand to other locations?

"I'm sure it's transferrable," said Ken Gassman, a retail analyst with Wheat First Securities in Richmond. "There's no place else in Virginia like it. It's the closest thing to being unique, and I don't use that word loosely. It should be declared a historic site."

Maloney isn't sure he wants to replicate it, even though imitators, such as Waccamaw Pottery, are sprouting everywhere. "Renting space in a shopping center is not our style," he said.

But he doesn't resent the imitators. "The competition keeps us keen," he said. "If someone is making money, you open a store next door."

As a concession to the trend toward outlet stores, the pottery has rented space to 30 outlets, many of them clothing chains, with the provision that they must be owned by the company whose goods they sell. "Otherwise, they can't offer bargains."

Maloney began making pottery as a teen-ager during the Depression. In 1938, he and his bride, Gloria Thacker, paid $150 for an acre on the edge of Rte. 60, built a potting shed, lived in the back room, and sold their wares to tourists who were beginning to trickle to nearby Colonial Williamsburg, then in the initial stage of reconstruction.

As their family grew to four children, the Maloneys built a larger potting shed, and lived on the second floor, heated in winter by the fires of the kiln below. In 1963, they moved to a new house -- round in the shape of a potter's wheel, that was surrounded by other pottery structures. It now serves as a Civil War museum.

While Maloney acknowledges that the pottery has made him a multimillionaire (six family members own all of the stock), his life style remains simple: He and his wife travel in a van, wear work clothes and, except for a back-yard athletic complex that includes tennis and basketball courts and a swimming pool, live modestly.

The pottery factory still makes and sells pottery, including the expensive salt-glaze 18th-century reproductions sold in the shops at Colonial Williamsburg, but the jugs and jars that once were the mainstay of the place now account for less than 1 percent of annual sales.

While employes and other family members are making plans for next year's 50th anniversary, Maloney is not too excited.

"I'm not interested in the past," the septuagenarian merchant said. "Sure, it's your rudder, your guide, but I'm looking to the next century."

He thinks the days of multiproduct discounters and warehouses, such as Wal-Mart and Price Club, and even the pottery as it now exists, are numbered. The future, he said, is with stores such as Circuit City, which specialize in one area, and then offer every conceivable version.

For the pottery, that may mean "paring down on what's not selling well, and increasing what's doing best."

Waving toward the open fields beyond the existing structures, Maloney envisions huge buildings with "nothing but silk flowers, another exclusively for wine and cheese, another for prints and framing, another . . . . "