How is cremation changing the funeral industry in 2019?

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.

U.S. cemeteryCemeteries 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?

Cremation marketA 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.

Future of the funeral industryHere 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.

Funeral Insurance: Legalities that can provide loop-holes!

LIfe-Insurance-PolicyThis story in the news today (USA Today: Funeral expenses leave mother’s body in limbo) highlights some potential risks with using life insurance to pay out for funeral expenses.

Dorothy Johnson believed she had been prudent and wise in taking out a life insurance policy for $50,000 which would cover her funeral expenses and hopefully leave a financial legacy for her children.

She did not foresee that she would die young (53 years) of a heart condition and having made her youngest son the beneficiary, that he would not legally at 16 years old, be able to access the funds.

We all know that insurance companies hate to pay out and will find any loop-hole, small print opportunity to void a policy or clause that you have transgressed to escape making full payment.

In the Johnson’s case, their mother’s body remains deteriorating at the funeral home whilst the insurance company claims that a legal guardian has to petition the court to access the funds.  This could take weeks, if not months, and all the Johnson’s want is to be able to hold a dignified funeral for their mother and say their final goodbyes!

The surviving family does not have sufficient money to be able to hold a funeral service without the life insurance funds.  They have approached 7 Social Service organizations for help, but as of yet no help has been offered.

This is a sad but true story of how ordinary families across America are affected by funeral costs today.  Preplanning is an excellent idea and is meant to save your surviving family the anguish of this sort of situation.  However, as this story exemplifies, you MUST ensure that all your ‘ducks are in row’ with any kind of insurance policy you take out to cover final expenses.

In the Johnson’s case it looks like they will not be able to have the funeral they wanted for their mother – a home-going funeral befitting for a woman who did nothing but care for others.  The family will have no option but to hold a simple and low cost cremation in order to handle the disposition of their mother.

If you hold life insurance, or are considering taking out a funeral insurance policy, do ensure you carefully check ALL the terms about how the funds can be accessed by your designated beneficiary.

Is the expansion of SCI at the cost of the average funeral consumer?

businessweek-death-incBusinessweek has this week chosen to cast a spotlight on the $16 billion death care industry.  The cover of Businessweek features the ominous title ‘Death Inc.’ as it takes a look “inside America’s fastest-growing merchant of death.”

The feature refers to Service Corporation International (SCI), the largest corporate player in the funeral industry, who is in the process of taking over Stewart Enterprises (STE), the second largest corporate death care company.

This take-over will give SCI a 15% share nationally of the funeral industry in the U.S., with an even greater share is some markets such as Florida, Texas and California.  Which, of course, happen to be states where significant populations reside.

According to data compiled by Everest Funeral, a Houston-based “concierge” funeral planning service, SCI charges $3,396 on average for a cremation with memorial service—30% more than independently owned rivals.  Similarly, SCI charges $6,256 on average (excluding casket and cemetery plot) for a traditional funeral, 42% more than independents.

funeral-costs

The message is clear – economies of scale do not operate with SCI as they do for other corporates in other markets.  Let’s take Walmart for example, who certainly hurt the funeral industry when they introduced their $995 casket.

The more consumers become aware of the insidious aspect of the funeral ‘sale’ and can make more informed decisions, thousands of unnecessary dollars can be saved by families on funeral costs.

The DFS Memorials network was established specifically for this cause.  To help families save money on funeral costs, and to champion the independent Mom and Pop funeral homes, who in many cases DO offer far better value than the corporate funeral giants.

Never mind $3, 396 – our network of cremation providers can offer a basic cremation with a service for half this cost!  A direct cremation can be purchased in some areas for as little as $495, and in most metro areas is available for under $1,000.

Click here to read the full story from Businessweek.

If you want an inexpensive funeral option – check out your local DFS Memorials provider.