Record stores across New Jersey are suffering from a problem that feels almost as vintage as the weathered shops themselves: their vinyl and CD deliveries are late — really late.

“I just got in Christmas records — I ordered them in October,” says Susan Grimm, a manager at Scotti’s Record Shop in Summit.

“We’re getting orders we placed two or three months ago, it’s an absolute nightmare,” says Princeton Record Exchange owner Jon Lambert, echoing a sentiment felt by stores throughout the Garden State, and beyond, who after years spent battling industry trends that have shifted away from physical media in favor of iTunes and streaming, now grapple with a new dilemma: a profit-hemorrhaging break in the supply chain.

Last April, Warner Music Group joined fellow industry juggernauts Universal Music Group and Sony Music Group by moving their physical distribution to third-party Direct Shot Distributing, an Indiana-based company that quickly became overwhelmed by the task of shipping more than 80% of all physical music in the U.S. market, as reported by Billboard and Rolling Stone.

So began the deluge of late and disappearing orders, and subsequent frustration from reeling store owners across the country, who relied on Direct Shot to ship both their new releases and catalog restocks at reasonable cost.

“We’ve had to take a significant percentage hit in our profit,” says another New Jersey shop owner, who asked not to be named. “... (Direct Shot) doesn’t know what they’re doing, and I don’t know what the endgame is.”

Princeton Record Exchange employee Michael Melchiondo browses one of the store's dollar bins. (Sydney Shaw | NJ Advance Media for NJ.com)

As Direct Shot attempts to right its ship, many New Jersey stores have been forced to employ “one-stop” middle-men distributors like Florida-based Alliance Entertainment in efforts to keep the latest Billie Eilish smashes and perennial sellers like Pink Floyd’s “Dark Side of the Moon” consistently on their shelves.

But therein lies another quandary: these one-stop distributors, while still priced for wholesale purchasing, are more expensive than ordering directly from the labels — the latest instance of small businesses being bled to death by shrinking margins.

For decades, the predators were retail giants like Wal-Mart or Best Buy, who could buy records in bulk for less cost per-unit and then sell them for a fraction of what indie shops could charge while still turning a profit.

Now, some local stores have been forced to raise their prices even higher to make ends meet.

“Sometimes it’s so heinous that I can’t absorb it all,” says the unnamed store owner of his inability to maintain prices without taking a loss on new vinyl.

The ‘perfect storm’

Direct Shot, which was founded in 2012 and ships more than 150 million items a year — not just music, but more than 125,000 different products — was purchased by parent company Legacy Supply Chain Services in June. Legacy has since taken measures to improve Direct Shot’s delivery times and accuracy, according to Legacy’s Director of Marketing and Communication Kyle Krug.

As Krug explains, it was not solely Warner’s addition last spring that sent distribution times off the rails. It was a “perfect storm” of complications, he said, from a steady increase in online ordering to shifts in off-shore manufacturing and Direct Shot’s change in workflow relating to big box stores.

“It used to be that this facility would ship massive bulk orders once a week to a Target or a Wal-Mart or Amazon distribution center — a big order and then they would distribute it,” Krug says. “Now what we’re doing is we’re shipping 2,000 store-level orders multiple times a week.”

Krug says that since Legacy acquired Direct Shot, they have “brought in high-end supply chain consultants” and reconfigured automation systems throughout the cavernous facility, as well as upgrading their warehouse management system.

“We used to have flip phones, now we have smartphones,” Krug says, relating the tech upgrade’s significance. “It’s a landmark shift that the new platform is going to bring us.”

Major-label ‘tanking’?

The distribution crisis not only threatens the livelihood of New Jersey’s three-dozen or so independently owned record stores, but the indie record labels that rely on the shops to sell their artists’ music, even if the labels themselves don’t use Direct Shot.

Joe Steinhardt, owner of New Brunswick-founded Don Giovanni Records — one of New Jersey’s premier indie labels, managing nearly 40 artists — explains the fiasco’s trickle-down effect.

Screaming Females, a New Brunswick band signed to Joe Steinhardt's Don Giovanni Records. (Farrah Skeiky)Farrah Skeiky

“The stores can’t buy as much stock, they’re closing down and they can’t afford to carry our records,” Steinhardt says. “Independently owned retail stores are the last space indies can compete fairly with major labels."

Steinhardt, who is also a Music Industry professor at Drexel University in Philadelphia, echoes a theory presented in last week’s Rolling Stone article, “‘The Whole System Collapsed’: Inside the Music Industry’s Ongoing Distribution Crisis,” that corporate maliciousness is driving the Direct Shot logjam. Steinhardt suggests major labels are purposely trying to choke off physical music for good as their products increasingly shift toward digital platforms.

“It’s either the luckiest coincidence of all time or it’s ‘tanking,’” Steinhardt says, comparing the situation to the theory that some professional sports teams purposely lose, or “tank,” for better draft picks and improved future business. “For years, major labels have been writing off their physical products.”

CDs and vinyl accounted for nearly a billion dollars in revenue in 2019, about one-tenth of the U.S. music industry, Rolling Stone reports.

Chip Heuisler, owner of the Tunes record store in Hoboken, says he’s been “getting creative” with stocking his shelves for years, taking in crates of used vinyl and buying directly from indie labels at cheaper cost, but he became more wholly reliant on one-stops for new releases last April, when a bulk of major-label exclusives didn’t arrive on time for Record Store Day — a holiday for collectors and his shop’s biggest sales day of the year.

“Weezer, Green Day, The Ramones, they all didn’t come until Wednesday,” he says. Record Store Day took place the previous Saturday.

A live performance at Tunes record store in Hoboken. (Aaron Houston/Star-Ledger file photo)SL

As Record Store Day 2020 approaches, with its list of hundreds of unique titles — which are not usually announced until early March then supposed to be shipped in time for April 18, creating a tight timeline — local stores are already getting antsy.

“I’m cautiously optimistic,” Lambert says.

Krug says Direct Shot has the nationwide event under control.

“We have a plan in place for Record Store Day,” he says. “We definitely want to nail that one for sure, it’s top of mind, everyone is focused on it.”

Further, Krug insists Direct Shot will move beyond the issues that have plagued the company for nearly a year.

“We (Legacy, Direct Shot, the 3 Majors) are all committed to evolving the supply chain to make sure physical music is always available for customers where and when they want to buy it. We are making strategic investments in people, processes, systems, and the operation itself to create flexibility, scalability, efficiency and sustainability.”

Bobby Olivier may be reached at bolivier@njadvancemedia.com. Follow him on Twitter @BobbyOlivier and Facebook. Find NJ.com on Facebook.