Funeral homes have been a staple of the death care industry for decades, providing essential services to families dealing with the loss of a loved one. However, in recent years, the funeral home business model has come under increasing pressure. There are several key factors that have led some to question the future viability of traditional funeral homes.
Declining Funeral Home Profits
For many funeral homes, profits have been steadily declining over the past couple of decades. This is partly due to the increasing number of low-cost cremations, which generate less revenue than traditional full-service funerals.
More families are opting for simpler, pared-down services, which also cuts into funeral home profits. Pre-planning and pre-paying for funeral arrangements has also had a negative impact on funeral home revenue.
Rise of Alternate Options to a Funeral Home
The internet has given consumers more options when it comes to funeral planning. Online cremation services like Cremation Society and Neptune Society provide direct cremation at a fraction of the cost of a traditional funeral home.
Additionally, online memorial sites allow families to create digital memorials and invite guests to share memories and condolences. While convenient, these online options divert business away from local funeral homes.
Online Options
There are also more online tools to help families plan funerals themselves and sidestep funeral homes altogether. Websites can guide people through the process of obtaining death certificates, filing for benefits, and coordinating other aspects of final arrangements. For technologically savvy consumers, DIY funeral planning is growing easier.
Increasing Cremation Rates
Perhaps the biggest factor impacting the funeral home industry is the steady rise in cremation rates. Over the past 20 years cremation has doubled and is now chosen over burial in a majority of cases. Cremations are quicker, simpler, and less expensive than burials, which funeral homes generate the bulk of their revenue from. If cremation rates continue climbing, it could substantially erode the funeral home customer base.
While these factors present real challenges to the business model, most experts agree it’s too soon to forecast the demise of funeral homes. Though industry consolidation is likely, traditional funeral homes still provide important services like personalized memorial ceremonies, grief counseling, and community support. By embracing changing consumer preferences, funeral homes can adapt and survive.
Consolidation in the Industry
Faced with declining revenues, many family-owned funeral homes are selling out to large corporate chains. The two largest funeral home corporations, Service Corporation International and StoneMor Partners, now control over 20% of funeral homes and cemeteries in the U.S. This consolidation gives them economies of scale but can lead to price increases and lower quality of service overall.
While closures of independent funeral homes are still relatively rare, industry analysts expect mergers and acquisitions to accelerate. Larger corporate entities are better equipped to withstand the revenue pressures impacting smaller operators. Consolidation will likely lead to a shift toward more cookie-cutter services versus the personal touch of family-run establishments.
Summary – Are Funeral Homes a Way of the Past?
While these factors present real challenges to the business model, most experts agree it’s too soon to forecast the demise of funeral homes. Though industry consolidation is likely, traditional funeral homes still provide important services like personalized memorial ceremonies, grief counseling, and community support.
By embracing changing consumer preferences, funeral homes can adapt and survive. But they will need to creatively respond to families’ changing needs and tightening budgets.