Death Care and the possible new orientation

Yesterday we published an article dealing with the potential $1 billion value of a consolidated group of companies that serve the death care space.  Yet, to my knowledge, not one of these companies deals with the physical aspect of taking care of the deceased human being.   I was, and still am,  somewhat astonished at that amount of money for some companies that, in my opinion, are ancillary to what I would call “the process of death care”.

It made me really stop and think — what will the consumer value as we move forward in the years?  For about the last 150 years the consumer has looked to the person who cared for the body of a deceased person for virtually all of the elements that they were looking for in the process of ceremony and memorialization of their loved one.

Think about it.  Going back in United States history to when embalming was really instituted as a process of returning one home and/or giving loved ones the chance to have a final look at the deceased.  The “Undertaker” not only did the service of embalming but provided the other necessities as well — wooden box (casket), shoveling of the grave, providing ropes for lowering into the grave, and on and one.

Moving into today’s society, our heritage funeral homes are set up to continue to be that full service provider.  We have the services, a crematory, large buildings with chapels and showrooms of caskets, vaults, urns, and memorial products.  However, society seems to be moving away from some of those selections into a process where they can pick and choose options, many times in a simpler fashion, than traditional funeral homes are set up to provide.

And, heritage/traditional funeral homes have costs structures with a large amount of fixed costs that many of today’s client families don’t want

Tom Anderson
Funeral Director Daily

to use.  It reminds me a little bit of the large historical telephone companies that have huge fixed costs in underground wire to maintain and keep up for a dwindling number of customers  while competitors in the new technology cell phone industry don’t have.  New cell phone players can be much more nimble and aggressive on pricing because they don’t have the “old technology” to keep up and pay for.  Over time, lower pricing will lead to more customers and a tougher financial outlook for the heritage carriers.  The same can be said of cable and satellite television operators and their battle against the new wave online operators.

The good news for U.S. death care operators is that the number of deaths is expected to increase each year until at least the year 2050.  At this point in time we are at about 2.8 million deaths annually in the United States and as the boomer population and succeeding generational groups age and eventually die, that will result in an increase in the annual number of deaths.  For the time being, that upswing in death numbers may help even those “not so good” operators stay in the black. . . but it won’t last forever.

A more interesting, and potentially worrisome,  question might be “Who will consumer families call to help them at the time of death?”  I can foresee two different types of death care providers and I think it would be appropriate for all death care providers to watch how the trends move over time so as not to be left out in the cold.

Disposition Oriented Providers —  These would be your traditional funeral home/cremation operators.  They will continue to be called when a death occurs and the family is most concerned with how their loved on is taken care of.  These providers will offer embalming services, funeral merchandise, cremation operations, and, more than likely, alkaline hydrolysis or water cremation operations as that segment of services grows.  Of greatest concern to this group will be the high cost of maintaining traditional facilities and professional staff while at the same time being able to offer affordable services to consumers.

Ceremony Oriented Providers —  I foresee a new trending brand of death care providers I call “Ceremony Oriented Providers”.  This group of providers will operate much like wedding planners and cater to a group of consumers that have a higher regard for the death care ceremony  over the care of the deceased.  That may sound strange to many of you, but those consumer clients are out there.  Those consumers are the ones who believe “cremation is cremation” and are not concerned about the logistics surrounding that act for the loved one.  They are much more concerned with how the “ceremony and remembrance” will be rather than the disposition act.

I believe that Ceremony Oriented Providers will build market share by being able to offer lower price points because they do not have to maintain traditional facilities and professional staff.  They may operate out of small buildings and in densely populated areas and will probably contract out the services of disposition, especially cremation.  They can hold ceremonies in churches, hotel ballrooms, and other non-traditional funeral settings.

My crystal ball is pretty murky, however.  It behooves all funeral/cremation service providers to watch the horizon on what is happening.  As technology for services advances and potential client families key in on it for selection of services, you have to make sure that you are with the trends.  None of us want to be “Ma Bell” or “Basic Cable” as the trends start moving away from us.


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