Dignity PLC continues transformation process
Great Britain’s largest operator of funeral homes, Dignity PLC, who own and operate 540 funeral homes continues to move forward with their transformation process that they announced earlier this year.
The public company filed their 3Q 2018 report on Monday and with it we can see some signs of what direction the company is moving. If you remember, the company took the bold move in January to lower the cost of their “basic” funeral by 25% to meet the competition of Co-operative Funeral Services. They also have tried unbundling their full-service options to allow for less services to be purchased by consumers and have offered greater choice on other options. Finally, they have also expanded their digital offerings and online presence.
So, where does this leave the company after three quarters of this new transformational plan:
- Revenue is flat — $US 316 million vs. $US 315 million from last year (2017)
- Profits are lower
- Funeral Services are up — from 52,100 funerals in 2017 to 55,700 in 2018
- Cremation Services are up — From 48,100 cremations in 2017 to 49,900 in 2018
- Total services are up 3%
- Total market share has increased to 12.1% from 11.7% last year (2017)
- The company’s web-site has seen an increase in traffic of 52% YoY.
CEO Mark McCollum commented, “We are pleased with how the group has performed in the period and following these results our expectations for the full year remain unchanged. Our work on the transformation plan is critical and we are encouraged by the progress that has been made. .”
Funeral Director Daily take: In the last couple of years consumers in Great Britain, along with some public officials have talked very openly about the “high cost’ of funeral services. Not only does Dignity PLC have to worry about competitor Co-operative Funeral Services, but the new entrant into the market, Pure Cremation, is working to lure clientele partially with a lower price point and aggressive advertising.
When you analyze the numbers from Dignity PLC, you will see that the “average” price per case has dropped (using our calculations) from $US 4,191 in 2017 to $US 3,977 in 2018. . . that is a drop of over $US 200 per case or a little over 5%. Dignity has actually performed about 5000 more services in 2018, but the revenue is about equal.
What this shows me is that Dignity PLC is probably willing to sacrifice profits at this time in order to gain market share. It appears that is exactly what has happened. It also appears that with the advent of their digital offerings that Dignity PLC may be able to reduce their costs over time if families “arrange” digitally instead of in person. Personnel costs saved could be huge if they can find a way to do such.
From my point of view, what Dignity PLC is doing is bold. If they can over time, gain market share by lowering prices and then gain profits by the use of technology, they may be able to set themselves up for long periods of great profits.
Again, from my point of view, what will make that idea work is if they can get digital technology to replace human beings in some aspects of funeral services. I don’t see that as being easily accomplished. However, in the days of artificial intelligence, and driver-less cars, tougher things have been done.
Related: Here are a couple of articles on Dignity PLC and their latest financial reports.
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