We reported in early 2018 that Dignity, the United Kingdom’s 2nd largest funeral merchant with a reported 12% of total market share dropped pricing by 50% in its lowest priced service segment to try to grapple more market share away from leader Co-op Funeralcare who has a purported 16% of the market share.  All reports to date indicated that Dignity has picked up market share although it was too early to see what it would be doing to the company’s bottom line.

There is now more reason to believe that Dignity is cutting into Co-op Funeralcare as Co-op has announced that it will reduce their “Simple” funeral price down even more.  Co-op announced that their “Simple” plan will now be available for $2,468 (U.S. dollar figures).  Co-op Funeralcare has also pledged to beat “like” funeral service quotes from all rivals.  Dignity, a public company, had its shares drop 6% on the news as investors now fear a “full-fledged” price war.

In an article on the subject you can read here, the pricing has had a dramatic effect on the consumer.  It is estimated that four times as many people are choosing the least expensive funeral choice option as were in 2015.

Funeral Director Daily take:  While these price wars are probably good for the consumer in Great Britain, they may make funeral service pretty lean in profits among the leaders if they continue to duke it out for market share.  And, you cannot be lean and unprofitable forever and continue to give good service.

So, can this price war happen in the United States over a large national base?  I don’t think so – at least for the time being.  While direct cremation pricing is competitive in many markets, each market is somewhat unique.

In Great Britain you have a smaller country with two relatively large funeral and cremation care providers.  They go at each other head-to-head in many markets.  In the United States we have a large geographic area where the competitors are not always the same.  There is the Neptune Society, owned by Service Corporation International, in many markets, but their competitors are mainly local competitors.  Each area has its own strategy for winning consumers and low-price is not always the only denominator.  This will change, however,  over time as other national providers move from traditional funeral care to the consumer preferred direct cremation alternative.

Price is a differentiator and, over time, I expect price to be a differentiator more and more in consumer choice.  At some point in time we will have a national cremation service that is promoted widely in the media.  Until that is figured out how to be done profitably the direct cremation consumer will pick their provider on a local market basis.

One thing we can take from this article is that more and more people are choosing the “low-price” alternative.  In Great Britain that number, possibly driven by the awareness of price competition, is anecdotally  up four times the number of only a couple of years ago.  Regardless of who your competition is and how they market price, I do believe that statistic concerning choosing lower priced choices will be coming to American funeral homes and crematories in a short while.  As an owner, you need to get a handle on your expenses so you can still thrive on those types of services in the future.

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