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MP93018

MAPS FUNERAL SERVICES 1998

Overview

Table of Contents

Executive Summary

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EXECUTIVE SUMMARY

In this report, Market Assessment analyses the market for funeral services in the UK and looks at the slow but steady changes in the structure of the funeral services industry.

The funeral industry is worth around £700 million per annum, but value growth of the market is driven only by rising prices as volume remains static at between 650,000 funerals per year with the rate being steady.

The ageing population means that an increasing proportion of funerals are for elderly people, and even the extreme elderly. Average life expectancy is now around 80 years, with death in youth and middle age increasingly unusual and due to accident or incurable cancer.

Increasing affluence of the population also has a major impact on the funeral industry, as the majority of people at death have sufficient savings and investments in property, or insurances to cover the cost of a funeral. In only a small proportion of cases is there any difficulty in paying the cost of a funeral either from the deceased’s estate or from insurance or family monies. Assistance can be obtained from the state in those instances where there are no other funds available. This level of affluence has been a brake on the growth of pre-paid funeral plans in the UK, which have been slow to gain acceptance with UK consumers, already well insured.

The tendency to remove death from the home and to the hospital, along with the expectation that healthcare and other professionals can handle more unpleasant aspects such as care of the dead and dying, has ensured that funeral directors are nearly always called upon to make funeral arrangements. Few families feel able to make the complex arrangements which are necessary, especially preparation of the body and ‘disposal’ i.e. burial or cremation.

Religious beliefs are important to consumers making funeral arrangements. Although the number of people who take an active part in their religion is decreasing, a majority still turn to religion for comfort when a friend or family member dies, and this is acknowledged in the number who want a religious ceremony. A growing number of consumers, especially younger people, are rejecting the institutionalised religions and are instead turning to either a more secular approach to the business of the funeral or sometimes to ‘green’ ceremonies - with biodegradable coffins for instance.

In the UK around 70 percent of disposals are cremations, as burial has gradually become less popular due to the relatively higher cost and considerations of hygiene and use of land space. At the same time funerals have become simpler affairs. Market Assessment research shows that a large majority of consumers would chose a simple funeral for a friend or relative, rather than elaborate arrangements. While a traditional funeral cortege with a horse drawn hearse, for example, appeals to some people, in general ostentatious displays and sentimentality are considered vulgar and inappropriate. Despite this, flowers and a religious service remain an important part of most funerals.

Takeovers and acquisitions in the funeral industry have resulted in a large conglomerate, Service Corporation International (SCI), accounting for over 10 percent of all funerals, but independent funeral directors and small chains still account for the major part of the market. Co-operative societies still remain important suppliers. Trade sources suggest that the period of acquisitions appears to have run its course, and the industry structure is expected to remain broadly stable for the next five years.

Prospects for the UK funeral industry are mixed. Volume growth is expected to remain fairly static with only a very slight rise expected in the number of deaths over the next 20 years, whilst the cost of a funeral, at an average of £1,200, is already being questioned by consumer organisations. With many consumers rejecting elaborate funeral arrangements, there are few additional services which funeral directors can offer to increase turnover. There may be some opportunities offered by the increasing interest in secular and ‘green’ funerals although these are not yet mass market. Prospects for pre-paid funeral plans will depend on funeral directors being able to convince consumers not only of their value, but also of their convenience, and of funeral directors being able to make sufficient profits out of such plans to more than cover their costs.

Text © 1998 MAPS

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