How Inflation Quietly Affects Family Businesses in America


MURRYSVILLE, Pennsylvania — Seventy years after the Ferri family moved their grocery store from Turtle Creek to Murrysville in Westmoreland County, they have decided to close their doors. The combined pressures of rising inflation and the sudden closure of Mainline Pharmacy, an independent pharmacy housed within their iconic building, were the final tipping points.

The cherished family grocery store shared a heartfelt note on Facebook announcing their end-of-May closure after serving as “a cornerstone of our community and … fostering connections that have spanned generations.”

Earlier in February, Mainline Pharmacy, a small local chain with 11 locations in various towns across western Pennsylvania, had shut down unexpectedly. These pharmacies, known for their red, white, and blue decor, were staples in towns like Harrison City and Level Green, with many staff members having dedicated over 20 years to the business. The pharmacy’s owners cited unsustainable reimbursement rates from pharmacy benefit managers (PBMs), who often reimbursed them less than the cost of medications.

A PBM acts as an intermediary between insurance providers and drug manufacturers.

According to a Facebook post from Mainline Pharmacy, the low reimbursement rates resulted in a loss of over $350,000 on 17,500 prescriptions since January, making it unsustainable to continue operations.

Gary Silvestri, Ferri’s general manager, highlighted that the loss of rent and traffic from the pharmacy, which accounted for 20% of their business, had a significant impact. Combined with the relentless inflation affecting both the store and its customers, staying in business became untenable.

The competition from big-box stores like Target, Walmart, and other local grocery chains compounded these pressures. These larger stores benefit from their buying power, enabling them to offer lower prices than independent grocers. In times of inflation, consumers are more likely to seek bargains, which impacts loyalty to local stores.

“As much as a customer wants to stay loyal, it’s hard. At some point, that pressure to watch your wallet becomes a decision as to where you shop,” Silvestri explained.

Jeff Hastings of Wholesale Central, a leading publisher in the wholesale merchandise industry, wrote that ever since the dawn of the big box store in 1962, small businesses have struggled to compete. He cited as an example what happened in Chicago’s West Side in 2006, when Walmart’s arrival led to the closure of 82 local stores, resulting in an estimated 300 retail job losses in neighboring zip codes.

A January 2023 Department of Agriculture report shows the percentage of grocery sales from the nation’s top 20 retail stores doubled from 1990 to 2020, while the share of food retail spending at traditional independent supermarkets dropped from 80% in 1990 to 62% in 2012.

Despite small businesses being the backbone of the American workforce, their failure rate remains high. More than half of them fail within the first five years.

Ferri’s defied those odds for 70 years. Surviving beyond two generations, let alone three, is rare for a family business. Throughout their tenure, they employed thousands of young people in the neighborhood, many of whom visited this week to bid farewell.

Long-time employees, some of whom have worked at Ferri’s for decades, and loyal customers alike walked through the now-empty aisles, their tears and emotions reflecting the deep bonds formed over the years.

Silvestri, now 68, started working at Ferri’s as a teenager and has been with the store for 51 years, even while attending Penn State’s local New Kensington campus.

“Leaving isn’t just leaving a building; it is leaving a family,” he said. “It is hard; I see parents walk in with their grandkids, and I can remember them coming here with their own parents 50 years ago.”

According to the Small Business Association, there are over 33 million small businesses nationwide, employing more than 60 million people. They are a critical driver of the economy but have borne the brunt of unprecedented economic changes, particularly in wages, staff shortages, and persistent inflation.

The closure of small businesses like Ferri’s results in a deeper loss than many realize. The tears shed this week are a testament to the significant impact the store had on the community.

The hardware store located in the basement of Ferri’s building will remain open, Silvestri noted, expressing hope that another independent grocer might take over the space.

“We shall see. Our closing is certainly going to have an impact.”

Salena Zito
Salena Zito
Pittsburgh-based columnist and reporter. Salena is also a columnist at the New York Post. She is the author of The Great Revolt. She previously wrote for the Atlantic and spent the last 11 years at the Pittsburgh Tribune Review as both a reporter and a columnist covering national politics. She has interviewed every president and vice president in the 21st century.

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