Business

Economic downturns and the funeral industry

In America we have been fortunate that in my lifetime forces have kept the economy stable.  Yes, I can remember when I started in the business that bank certificate of deposits on funeral trust funds paid 16% annually – but that was for a very short period of time.  The economic stability of America lets businesses plan and execute with only the very remotest threat of a depression or drastic economic downturn.

Contrast that with what is happening with our colleagues in the South American country of Argentina right now.  According to this article, in the biggest economic crisis in two decades, the headline states that “Dying becomes a luxury as economic downturn hits home.”

Unemployment, poverty, the GDP falling by 2.5%, and a 47% increase in inflation has led funeral directors to drop their prices simply because the consumer public does not have the spending power they once had.  One funeral director who operates a 60 year old funeral home (Cocheria Tacuari) states, “It’s an economic problem.  People don’t have enough money to pay for a service.”

And, in this traditional Roman Catholic country families are more than ever opting for cremation.   At Cocheria Tacuari, according to the article, the cheapest option – cremation with no services – runs a client family about $415 — in a country where the minimum monthly wage is only about $282.  According to government statistics over 79% of the population is now cremated.

Funeral Director Daily take:  While economics on the macro level is way above my abilities, I am glad that we have stability in the economy here.  I cannot imagine operating a funeral home in an area where virtually nobody can afford to pay the bill for services.

I’m old enough, however,  to have heard the stories of funeral directors that operated during the Great Depression and how difficult and frugal that time period was.  On the other hand, it was the funeral directors that were able to offer services at reduced prices during that time that build tremendous brand loyalty by doing so.

So, I think it behooves us, especially smaller independent operators, to sometimes think about those that have less than us.  Giving a break to a family in crisis may in the short term cost some profits, but in the long term it may build loyalty for your firm that is hard to get.

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