It is always fun when the ball drops in Times Square at the rise of the New Year to think about how the future will be affecting you. Thinking about what will happen in the death care industry in North America is not something that comes to everybody’s mind, but if you make your livelihood in that sphere then it does make you wonder about the future.
Here is what Funeral Director Daily sees in its crystal ball for the coming year:
The Rise of Cremation and Limited Services — This is certainly nothing new. However, the United States -after doing things one way for our first 239 years as a country – shifted from a majority burial society to a majority cremation society in 2015. That shift, and its continuing movement to an even higher percentage of deaths going to disposition by cremation in the future, shapes virtually every aspect of the death care industry in the country and will continue to do so. We expect the trend of increased cremation and the accompanying trend of limited services to continue and very much drive the industry thinking.
Staffing Shortages — Mortuary schools continue to be filled with high caliber applicants. The problem is that once graduated these young people seem to become disenfranchised with their work in a relatively short period of time. My thoughts are, that among other issues, the fact that so many of these students want to go into the profession to “help people” and then seem to find employment that falls short of that goal is a factor. Other factors driving good young people out of our profession include wages and work schedules – especially call schedules. Again, cremation and limited services is a root cause here. Low cost services stifle wages and the growth of limited services creates a work environment where new hires don’t necessarily get the feeling that they are “helping” people.
A Rise in Alkaline Hydrolysis and Environmentally Friendly Funeral Homes — I think we will see increased purchases and installations of alkaline hydrolysis machines as they become known as environmentally friendly “Green Cremation” or “Flameless Cremation” methods. We may even see a franchise type “Green Cremation” service that operates with 100% alkaline hydrolysis. I think that could be a growing trend and could be profitable in metro areas. We will also see more full service funeral homes open up as being “Green” or “Environmentally Friendly”. While I see entrepreneurs opening those types of funeral homes, contrary to an alkaline hydrolysis service, I just don’t see the profitability in them because of the high fixed costs to operate traditional funeral homes and then courting a less than full market of consumers.
Acquisition Markets — It is inevitable that in a business model with lower revenue per case and staffing shortages that consolidation occurs. Those factors, along with the ever increasing family business units who have no successors will continue to drive the acquisition market. There is no shortage of regional and national operators to battle for the best businesses that come to market and excellent prices will come to those fortunate to be blessed by a high population and high market share – regardless of type of services conducted. If you are a rural funeral home, however, your suitors will be less in number and prices may well go down if your revenues go down due to a growth of limited services coupled with an expected Fed interest rate hike.
Consolidation among the casket companies will continue — Batesville with 43% of the U.S. market share and Matthews (Aurora) with 31% of the U.S. market share will continue to dominate. The small casket companies will continue to consolidate among themselves to stay relevant in the industry.