become a household term in the U.S. today, now accounting for 45% of all
funerals conducted. Even those states traditionally very slow to
accept cremation – Mississippi, Tennessee and Alabama are now reporting
significant increases in cremation cases. The funeral industry, known
in the past for its slowness to respond to change, is starting to respond
to consumer demand for new and different death care alternatives.
As the National Funeral Directors Association (NFDA) Convention for 2014
winds up today (10-15-2014) in Nashville, the NFDA has published a report
highlighting that by next year (2015) cremation will surpass burial as
the preferred funeral option for the majority of Americans. This
will require the funeral industry as a whole to re-align its strategies
for future stability.
with a local crematory.
As the volume of cases increases, so the profitability of owning and operating
a cremation machine becomes of key interest to funeral home owners.
How is the funeral industry
There are several notable and
significant changes occurring in the funeral industry in the U.S. right
now. There is a huge shift towards cremation. This is requiring
many funeral homes to address their business model, premises and staff
training. Legislation governing how funeral businesses operate does
vary by state. In those states that permit it, more funeral homes
are seeking to invest in cremation equipment, and cremation retorts, to
be able to offer cremations ‘in-house’ as opposed to sub-contracting
As more funeral homes install
cremation equipment, so there is a need for specialist training in how
to professionally and safely operate crematory equipment and also handle
the disposition of human remains by cremation in a dignified and secure
manner. Two of the key questions many families ask are “how do I
know I am getting the remains of my loved one back” and “is my loved one
cremated on their own”?
Because cremation is such
a final disposition of a deceased body, there is need for stringent checks
and measures. The National Funeral Directors Association and the Cremation
Association of North America (CANA) are both now actively offering crematory
certification courses to their members to encourage the safe and regulated
practice of cremation in the U.S. So largely at present funeral homes
CAN adapt to the cremation trend but in the short-term there is an investment
cost – both in equipment, premises and training. The question for
many funeral service providers is HOW they will elicit a return on investment
when the average case revenue is perhaps 40% less than a traditional funeral
(or maybe more).
How does a cremation funeral
differ from a traditional burial?
A traditional burial is an elaborate
affair that can be a simple funeral service prior to a burial, or can involve
viewings, visitations and wakes. It can last anything from a few
hours to a few days. A casket is required, as is a burial vault, a cemetery
plot and a grave marker. Transportation will transfer the deceased
from the funeral home to the cemetery and or chapel, and embalming, cosmetology,
and hairdressing are all incremental services. A traditional burial
costs anywhere between $6,000 - $26,000 when all the services and merchandise
is totaled up.
A cremation funeral differs
in that there is no immediate requirement for a burial plot, no need for
a casket or a burial vault, and in most cases no requirement for embalming.
The funeral ceremony is conducted just as it is prior to a burial, but
the body is transferred to the crematory after the service. Some
funeral homes offer rental caskets, so even if the body is in repose during
a service, there is no need to purchase a casket for a couple of hours
Why is cremation becoming so
The NFDA report cites “the rise
in consumer preference for cremation is due to a number of factors, including
cost, decreased household discretionary income, environmental concerns,
fewer religious prohibitions of the practice, a growing preference for
simpler, and less ritualized funeral ceremonies”
Rightly the NFDA report mentions
cost first and decreased household income second. These I believe
are the two most significant reasons why cremation is becoming so popular.
According to CANA a full cremation service will generally cost around $3,200,
so this is at least a third of the cost of a traditional burial.
That is a HUGE saving for a family and when according to a recent CNN Money
report, 76% of Americans are living pay-check to pay-check, it is not surprising
that cremation is becoming resoundingly the death care option of choice!
Whilst the funeral industry
IS attempting to now address and acknowledge this shift to cremation and
not treat it as a passing fad, they still behave largely ostrich-like when
it comes to discussing direct cremation. The main mantra I hear from
those within the industry at present is that we need to “educate people”
about how memorialization and grieving is such an intrinsic part of what
they do. Much focus is given to how funeral homes should become uber-centered
on community engagement, social media and customer experience. In
fact a session at the recent NFDA Convention focused on enhancing customer
service with emphasis on establishing “an emotional attachment with your
customer”. Whilst some in the profession think that building
on this ‘emotional attachment’ is key to encouraging families to buy into
incremental services, there are others who understand that a number of
families today are choosing to have NO emotional attachment whatsoever.
In fact there are more online funeral businesses emerging, and more funeral
homes offering families the option to conduct all cremation arrangements
online without ever visiting the funeral location.
used, and the cremated remains
are returned in a temporary container. This is available to a funeral
consumer at a lower cost. Although some funeral homes still charge
$2,000 - $3,000 for a direct cremation [The cost of a direct cremation
varies by area and funeral location but is always listed on a funeral home’s
GPL], low cost cremation providers offer the exact same service for between
$600 to $1,200. Indeed the average cost of a direct cremation through
the DFS Memorials network is $895 and the providers in the network (who
all specialize in offering a low cost direct cremation option) report that
on average 80% of the cremations they perform are direct cremations.
Direct cremation – the most
economical disposition choice
The demand for the most economical
means of cremation is what scares many in the industry most. Although
we are shifting by a majority to cremation, it is the percentage of these
cremations that are direct cremations that is perhaps the most alarming.
A direct cremation requires the most minimal services of a funeral director
and is offered to the funeral consumer at a fraction of the cost of a full
service cremation. No pre-funeral services (viewing, visitation,
ceremony) are conducted, a basic cremation container is
What are the implications of
such a shift to cremation for the funeral industry?
The shift to cremation is already
hurting funeral homes profit margins. Revenue per funeral case is
down. According the NFDA report by 2020 39 states will be cremating
more bodies than they bury. By 2030 we can expect a cremation rate
topping 70% (maybe even sooner than this projection). The implication
for funeral businesses is that with revenue per case declining, then the
only solution is to increase case volume.
A number of funeral homes
are already doing this by increasing their service area. The Internet
certainly lends itself to enabling a funeral service provider to market
himself to a wider audience. In most cities now there is a battle
waging for the direct cremation market, as funeral homes battle it out
over volume of cases. The funeral industry is fragmenting.
Direct cremation signals an era when the industry transgresses into becoming
a body disposal business. There has also been an upsurge in funeral
celebrants offering families their services to memorialize a loved one,
and a whole array of businesses set up to create cremation artifacts.
The raw reality is that many families are opting to use the services of
a funeral service provider merely to conduct the cremation element, and
then conducting their own memorialization once they have the cremated remains.
In fact family ash scattering ceremonies are becoming surprisingly popular!
When cost and decreased household income are driving the shift to cremation
– then these same consumers will opt to save as much as possible on the
overall funeral experience.
The NFDA report attempts
to massage its members concerns about cremation by reporting that “more
than 58 percent of consumers’ associate cremation with a memorial service
whereas just over 15 percent of consumers associate a traditional funeral
ceremony prior to cremation.” Unfortunately what this statistic does not
reflect is that this association of cremation with a memorial does not
necessarily indicate whether these consumers would opt to use the funeral
home for a memorial, employ the services of a funeral celebrant or conduct
their own memorial service. The fact that only 15% associate a service
prior to the cremation IS a reflection of how fundamentally our views about
using a funeral home are changing!
Funeral homes are closing down.
There are in fact too many funeral homes in the United States, and funeral
businesses have been closing down over the last 10 years. In 2003
there were 21,700, in 2013 only 19, 486 were still in operation.
The shift to cremation for those funeral homes with large overhead that
have been sustained by $10,000 traditional funeral cases is catastrophic.
There is just no way that an average case value of $3,000 will allow them
to continue profitably.
How is the industry responding
to this shift to cremation?
As I mentioned above in the
section on how the funeral industry is changing, one of the primary ways
that the industry is responding is by investing in cremation practice.
More funeral homes are installing cremation equipment, in some cases even
taking on new premises to house their cremation center. There is
an incremental cost to HR and staffing budgets as further training is required,
along with attendance at relevant conventions being hosted to help funeral
directors understand, and respond to, this shift to cremation.
Another response to this
shift is acquisition and consolidation. Some of the bigger funeral
companies (and even some smaller ones) are embarking on a program of acquiring
additional funeral locations and premises. In some cases this sits
side-by-side of the fact that some funeral homes are closing, be it they
cannot maintain in businesses anymore, or that a funeral director is ready
to retire and sell up.
Service Corporation International
SCI (the largest single death care corporation) has acquired its two largest
competitors in the last few years. As part of this process it has
consolidated a number of funeral locations. SCI also acquired controlling
share of the Neptune Society in 2011 – a nationwide cremation company solely
dedicated to direct cremation.
An associate of mine within
the funeral industry, operating out of Miami, stated to me at the beginning
of this year that it will be the ‘newcomers’ to the industry that will
be the real winners, those that are not ‘old-school’ and can approach the
funeral industry with a business head, instead of treating it like a family
inheritance or vocation. This juxtaposition between the old and the
modern is very apparent when you evaluate many funeral service provider
websites today. The old-school regale their visitor with tales of
their heritage and what they used to do, do not often devote much content
to cremation and certainly never mention prices! The more modern
funeral director is succinct in stating what they do now, what services
they offer to families, with exceptional content on cremation and clear
and transparent pricing information.
The funeral director that
truly IS responding to this huge shift to cremation is already ahead of
the game. He will have been positioning himself for a few years now
as the ‘authority’ on cremation in his area. He will understand that
providing families with understandable and affordable cremation packages
and pricing is imperative. An example of this can be seen by looking
at Georgia Funeral Care & Cremation Services. Established in
2012, Kevin Marcy designed Georgia Funeral Care from the ground up to be
a modern funeral business targeting the demand for simple and affordable
funeral alternatives. The homepage of his website does not mince
words but outlines exactly what most funeral consumers want to know…what
do I get and how much does it cost. Kevin Marcy is not alone in his
campaign to re-imagine the funeral industry, there are others like him
across the U.S., and I touched on this subject in my article on ‘How
many funeral homes are creating a new cremation arm to optimize the market
place’ last year.
What will the next 100 years
of funeral service look like?
What can we expect to see in
the years ahead? Certainly a death care industry different to the
last 100 years! Cremation will fundamentally change the landscape
of the death care industry in the U.S. Not only will funeral homes
have to adapt to meeting these changes, cemeteries need to adapt too.
Some have already changed their grounds to accommodate memorial scattering
gardens and more extensive cremation niche sections. Funeral businesses
will need to become more technology savvy to reach a wider audience online,
to cater to families who wish to make arrangements online, to better maximize
efficiency and turn around the highest volume of cremation cases they can
manage in a day. The days of the hearse going out to collect one
body are over, the modern funeral vehicle will be a refrigerated van that
can complete a round to collect 10 bodies or more at once.
Maybe we will see Super-Crematory
Centers handling high volume of direct cremations and serving regional
areas. However, we should keep an eye on what has occurred in Europe
where cremation rates are high, and similarly gas prices have increased
as have other costs associated with cremation. Legislation on emissions,
permit charges, coroner death certification – if all these change or increase
it will drive the cost of cremation up. Perhaps natural green burials
will come back in vogue if this can be offered to families at an equitable
cost to a direct cremation? However, as a postmodern nation fascinated
with convenience, instant gratification and personalization, cremation
satisfies our need for a quick and convenient disposition, with the option
for unique personalization variables for what we can do with the cremated
remains. This cremation trend has some distant to go yet to run its
||Expert Author: Sara
Sara is the Editor in Chief
for US Funerals Online and has been researching and writing about the death
care industry in the US for the last 5 years.
Published: October 15th
NFDA Cremation and Burial Report: Research, Statistics and Projections
Association of North America
- 76% of Americans are living paycheck-to-paycheck