Business, Finance

Dignity plc annual report: “In time, price drop will lead to volume growth”

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There was much ado last year about Great Britain’s largest provider of funerals and cremations, Dignity plc,  and their upcoming change in strategy.  While not apprised of the entire situation, I do know that the company was coming under scrutiny from the Competition and Markets Authority (CMA) as well as the Financial Conduct Authority (FCA), as were all United Kingdom providers of death care services, in their pricing of services to consumers.

According to the Dignity plc Annual Report and Accounts the company provided 74,800 cremations and 79,200 funerals throughout its 776 branches in the country.  They also have 581,000 active pre-arranged plans according to the same report.  Revenue for 2021, listed in United States currency, was US $417.7 million.  That is about a 1% decrease from 2020’s revenue of US $422.1 million.

On those revenues “Underlying Operating Profits” also dropped from US $71.2 million in 2020 to US$ 65.9 million in 2021 — a decrease of about 7.5%.

Direct cremation is growing rapidly in Great Britain and the costs associated with that death care selection and other death care selections were being questioned by many consumers.  Pricing would be one of Dignity plc’s strategic plans and here is what is said about that in their 2021 Strategic Review:

“. . . One element of the (strategic) proposition is price. We had previously allowed our prices to rise above the market level, which
is not the way to serve clients well and doesn’t align with colleagues motivated to do the best for their clients. High prices were the
single biggest factor causing the underlying business to lose share year after year (before acquisitions) and was leading to likely failure.
We changed that in 2021 and have lowered prices substantially.  Our pricing philosophy now is to offer the best value-for-money
and not have price be the reason for not choosing us. This is a big change for Dignity and the effect of lowering prices is to reduce
how much we earn per funeral.” 

That Strategic Review goes on to say this about the experience so far:

However, our experience since we changed prices has been that the market share loss stops and then reverses, and so in time we expect that revenue loss to be more than compensated by volume growth, especially when combined with all the other elements of our strategy.”

Funeral Director Daily take:  In their 2021 Annual Report Dignity makes this statement:  “The way that people mourn for their loved ones is changing, as is the type of funeral they want to pay tribute to their life. New competitors have emerged across different parts of the sector, particularly in the provision of at-need funeral services. Dignity’s new strategy will help us to better serve the changing needs of the bereaved and provide support to a greater number of people.” 

I think Dignity may be one step ahead of many who in the profession who don’t see the new wave in thinking and that new competitors have emerged who will “pick off” some of those death care consumers who are thinking of “something different”.  Every death care business needs to look at their marketplace and figure out how they compete in it successfully going forward.  Quite frankly, that should be a recurring exercise for all business leaders.

The Dignity plc Annual Report of 2021 and the Power Point slide show presentation that comes with it is powerful in enumerating what is happening in death care around the world.  In the Power Point presentation you can see some of the strategies that Dignity is embarking on to be able to compete more effectively including:

  1. Becoming “more Regional” (as compared to National) in scope
  2. Empowering “Business Leaders” over “Managers”
  3. Creating more “employee empowerment” over a “Command and Control” structure
  4. Relying less on a “hierarchy” of management
  5. Reducing the number of “brands”

You can find the 2021 Dignity plc Annual Report here.

You can find the Power Point presentation here.

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