The U.S. cremation rate is now at almost 55%. Forecasts are for the rate to reach 80% within 20 years. How is the cremation trend changing the funeral industry?
Some say that the funeral industry faces some grave challenges.
Let’s first look at how this cremation trend is affecting the cemetery industry?
Most certainly cemeteries are facing a huge challenge. Some cemeteries have added cremation niche mausoleums and ash scattering gardens in recent years. Now there are reports of cemeteries in some locales merging. This is an attempt to better prepare for a future with a very low burial rate and reconcile overhead costs.
Cemeteries are not as popular as they once were. With Americans’ attitudes changing, more migration happening, and less religious and nuclear family values, cemeteries are becoming green spaces with little foot traffic. There are progressive cemeteries that have added green burial sections and realigned their purpose in their community by holding community recreational events.
As the cremation rate continues to climb, cemeteries will be further challenged to stay operational. Families save thousands of dollars opting for cremation instead of burial, but these same families are then less likely to spend hundreds of dollars interring cremated remains. Cremation niches, scattering or interring ashes, all cost if you use a cemetery. Fees start at around $300 for a basic scattering or natural burial of cremated remains. Although most cemeteries are likely to charge a minimum of $500 to inter cremated remains.
And, now what changes have we observed in funeral homes?
I think there are several distinct changes that we can see. Firstly, the revenue potential for funeral homes has decreased markedly. The average cost of a traditional funeral is $8,755 (NFDA 2018) without any cemetery costs. If a family now opts for a cremation service, that price is likely to drop to around $3,600. So, it is easy to see that revenue for funeral homes must be decreasing as families shift from traditional burial to cremation.
Secondly, more small independent funeral homes are installing cremation equipment. Presently, 30% of funeral homes own and operate their own crematory, with a further 10% planning on installing equipment in the next 12 months. The current growth trend in cremation may indicate it is a sound business strategy to install cremation equipment on-site, however, this equipment can be costly for a small business. If a funeral home cannot increase their volume of cases and now has increased their overhead, they could be in serious trouble in the coming months or years.
Other changes we are seeing are related to changes in legislation and training. Many states require funeral homes to have an embalming room to be licensed. This was challenged in Minnesota a couple of years ago by Crescent Tide Funeral & Cremation Services. The small funeral business challenged the requirement for an embalming room when all they were offering was cremation services. They won their case. Other states are beginning to re-visit funeral legislation, especially where it is holding small funeral businesses back. More training is being implemented for cremation technicians who do not have to hold a funeral director’s license. In Florida, the law permits a business to open as a ‘Direct Disposer’ only.
More funeral homes already have, and continue to, open separate cremation companies to cater specifically for the demand for cremation. And many funeral homes have sought to extend their normal service area in an attempt to generate an increase in cremation cases and hence increase their revenue. This, of course, has implications for those small funeral homes who are not competing for the cremation market.
How can all funeral homes remain in business when over half of Americans’ are opting for a cremation? And furthermore, figures indicate that around 80% of those cremation services are low-cost direct cremation. In most cities now a direct cremation can be arranged for around $700.
How is the death care sector changing overall to adapt to cremation?
A few big changes are beginning to occur. Most notably I have observed an increase in acquisition.
This is not only corporate acquisition on a large scale, but a number of private regional, and even private family groups extending their reach into new markets.
The Internet has changed the marketing of funeral services more than any other medium in the last century. Marketing funerals has always been complex. Selling a service that no one really wants to purchase!
Now funeral companies are using Google Ads to position themselves in a way never before possible. With a greater capacity to reach into areas and markets with greater ease and investment. Aside from the increase in funeral homes now having websites and entertaining social media, a growing number are offering online arrangement portals. Allowing families to conduct cremation arrangements without ever visiting the funeral home.
The future journey ahead for the funeral industry.
Here are my predictions for some further changes we are likely to see in the next 10 years. We will see a reduction in the number of funeral homes in the U.S. The number has decreased by at least 2,500 over the last 10 years. But many more small-town funeral homes will not be able to compete in the changing death care landscape.
The probability that we will see another shift in the landscape. There is a growing concern about the environment and an interest in natural death care alternatives. Cremation (albeit more eco-friendly than traditional burial) still creates the same emissions as a 500-mile car journey. Alkaline hydrolysis (water cremation) and human composting are new initiatives that are causing disruption. If gas costs, cremation permit fees, and emission charges rise then the cost of cremation may escalate to a point that the public will turn again to a new alternative that offers affordability and simplicity.