USA Funeral Industry














 
 

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The US Funeral Industry Today

How much is the U.S. Funeral Industry worth?

The U.S funeral market is currently estimated to be worth around $20 billion annually, with 2.4 million funerals taking place each year. Due to the increase in the U.S. senior population in coming years, this death rate is set to rise.  There are an estimated 19,000 funeral directors currently offering services in the U.S, but exact numbers prove to be difficult to pinpoint as the profession is regulated differently by each State.  This does mean that it is wise to ensure the funeral director you choose is reputable and appropriately licensed. 

Funeral Industry declining profits and changes in the funeral market

In 2009 senior industry analyst Toon van Beeck, of research firm IBIS World, reported that the revenue of the U.S. funeral industry will grow by 1.2% in 2009 to a $20.7 billion dollar industry, which, in all fairness, was down from a 2% revenue gain the previous year.  Since the economic downturn the funeral industry has continued to see a decline in profits as families economize on funeral costs or choose cremation as a lower cost funeral alternative.  In 2012 the funeral industry reported at its annual NFDA convention that the average profit from a funeral was down by 37%.

Today 42% (2014) of Americans are choosing cremation and this rate is increasing exponentially in all states.  It is anticipated that by 2020 over 60% of Americans will be cremated.  Some states such as Nevada, Washington and Hawaii have cremation rates over 65%, whereas Mississippi, Alabama and Kentucky have the lowest cremation rates in the U.S.

“Death and Taxes”: The inevitability of a life cycle…

“The honest-to-goodness truth of the matter is that everybody does die,” stated Arvin Starrett, a spokesman for the National Funeral Directors Association and the owner of Starrett Funeral Home in Paris, TX in a 4/18/09 N.Y. Times article. 

‘Death and Taxes’ are, as the cliché states, two unavoidable facts of life!!  And, let’s face it in an economic and political environment that changes with the wind, it is the one absolute truth we all can accept.  That is why the funeral industry, had continued to boom when the global and domestic economy around them was crumbling. It is now estimated that the real average cost of a traditional funeral is over $8,000 and much nearer to $10,000 when cemetery fees are taken into account.

Funeral Prices: Why do they vary so much?

Funeral prices can, and do, vary enormously both within a local area and between funeral directors, so comparing like for like quotes is strongly recommended to anyone requiring funeral related services.   I am often asked by families why funeral prices can vary so much, and why funeral directors are sometimes unwilling to disclose full pricing.  The answer is that the funeral industry has existed for decades as a business where families did not ask the cost upfront but accepted the cost of a final funeral bill, sometimes without question.  Today that has all changed as families are demanding simpler funeral services at less cost and with a clear disclosure of what they are paying for.

Family-owned vs. Corporate Funeral Companies

Funeral director businesses range from part time, sideline ventures to family-run enterprises, from small to medium groups through to international corporations.  One of the main criticisms of the industry by watchdogs and other groups is that some funeral homes are not being totally clear as to their true ownership, hence the reason many traditional family business names still exist even though they may have been acquired by larger groups.  Therefore, when acquiring funeral services it is wise to establish exactly whom you are dealing with, as many people opt to choose a trusted local family funeral business, only to find they are dealing with a large corporation.   As already mentioned funeral prices can vary enormously, and as a contradiction to current retail practice, it is not always the national corporations with large buying power that offer the best value services!  As a $20.7 billion annual industry, the funeral trade has also attracted unscrupulous traders who may appear to offer discounted services, but be sure to check out any firm offering what seems unrealistically discounted services! 

The funeral market in the U.S can be largely viewed as a juxtaposition between the corporate industry and the independent family-run business.  Service Corporation International (SCI) who's main brand is Dignity Memorial is the largest corporate company in the funeral industry marketplace.  SCI bought out the number 2 corporate company ‘Alderwoods’ in 2008 and in December 2013 acquired the number 3 corporate company Stewart Enterprises.  SCI also own the National Cremation Service brand, The Neptune Society and Advantage Funeral and Cremation Services.  In 2012, SCI grossed $2.4 billion in revenue, and currently sits on $7.4 billion in future revenue from their preneed funeral and cemetery sales. SCI has funeral properties in 43 states, 8 Canadian provinces, and select parts of Germany.  However, their recent acquisition of Stewart Enterprises has led to them selling off and consolidating properties in some states in order to comply with the monopolies commission.

Be careful to check the identity of the funeral home you choose, as many corporate funeral homes still trade under a family name. If in doubt, it is wise to ask the question directly as to whether they are independently owned or part of a corporate chain.  In some cases where SCI acquired funeral homes, they not only kept the same family name, but also continued to employ the same staff!

There are also several privately owned companies who are conducting large numbers of funerals in the US.  Northstar Memorial Group, Smart Cremations and Newcomer Funeral Service Group offer services on a larger scale.

Licensing and Trade Associations in the Funeral Market

The National Association of Funeral Directors (NAFD) operates on a worldwide scale and has their own strict “Code of Practice” by which their members are bound.  It has the broader membership as it caters for the whole funeral profession, from independent through to national corporate companies.  There are a number of trade associations for the U.S, many of these operate at a State level. The majority of funeral homes are members of one or more of these associations and schemes; however there is no regulation or law to insist on membership of any.  It would be worth considering whether the funeral director you are selecting to handle your needs is a member of one of these trade associations.  

There is also Selected Independent Funeral Homes – a member association solely for independent funeral homes.  CANA (Cremation Association of North America) devotes itself to the furtherance of cremation training and the collation of cremation-related data.  ICCFA (International Cemetery, Cremation and Funeral Association) is an international association.

Expert Author: Sara J. Marsden

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.

Revised: July 18th 2014

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