The departing board chairman of Golden Charter funeral plans offers this cold sweat-inducing warning to independent funeral directors in a valedictory address in the Golden Charter newsletter, Goldenews, which we are grateful to have had forwarded to us. He says:
Co-op and Dignity have both acquired significant additional scale, and unquestionably they are operating with a better financial model than independents – on their own – can hope to achieve. There will be no softening of their ambition and there will be greater local commercial pressure. We can also expect consolidation to come from other quarters, particularly private equity.
Not only are these two corporations and private equity seeking to dominate the funerals market, they are making substantial in-roads into the crematoria market. The strategy is to provide future control of and access to crematoria which will potentially form a risk to independents and the prices that they will have to pay.
Corporations like to deal with corporations, and Co-op and Dignity present like-minded opportunity to the insurance companies. In 2007, an over 50’s plan was merely a means of building a financial provision for a funeral – the question of service provision did not come into it.
However, the insurance companies now manage 60 per cent of funds subsequently to be used to pay for a funeral, and it is a reality that they exert considerable influence over who carries out a funeral.
The funeral industry is one of the last bastions for independents. Almost every other market sector has fallen to national or international consolidation. Over the next five years, the choice for an independent funeral director is simple: sell to the competition or come together and exploit your collective strength.
This remains a chilling analysis even after you factor in the chairman’s sales pitch: ‘Over the next five years, the choice for an independent funeral director is simple: sell to the competition or come together and exploit your collective strength. Golden Charter is the only credible collective umbrella.’
Consolidation, done well, benefits consumers and shareholders. The present corporate players will fail to grow their market share if they don’t address pricing, service and positive brand identity, and they don’t look as if they’re going to hack it. But there are unquestionably opportunities for the right player with a brand that dares to speak its name. As we like to say, if John Lewis did funerals…
The days of the independents just have to be numbered, don’t they? Come on, look at your high street and go figure.
Or do they?
Consider the work of the Campaign for Real Ale (CAMRA). Among its many successes it lists these:
- Created a rich and varied choice of real ale – In the 1970’s CAMRA successfully fought the efforts of the big brewers to replace traditional ales with tasteless keg beers. Since seeing off the likes of Watneys Red, Tavern Keg and Double Diamond the campaigning efforts of CAMRA has seen the creation of hundreds of new breweries producing a wonderful array of real ales.
- Smashed the Big brewers stranglehold on UK pubs – In the 1970s and 1980s the Big Six brewers, Allied, Bass, Courage, Scottish & Newcastle, Watneys and Whitbread monopolised regions of the country. CAMRA lobbied against this lack of choice in Britain’s pubs and gradually eroded these regional monopolies.
- Number of Breweries increased Fourfold – Since CAMRA was founded the number of breweries operating in the UK has grown fourfold to over 840 breweries. Without CAMRA’s presence it is doubtful whether real ale would be as widespread as it is today.
The consumer is the key to this. CAMRA succeeded because beer drinkers realised they were being sold piss poor beer and asked for better.
There’s a parallel in my mind with the way supermarkets operate. I dislike them but, as they never fail to point out, millions of customers shop with them leaving little room for alternatives.
Supermarkets use the same tricks to reduce costs as the corporate funeral providers – reduced overheads, large scale purchasing power, economies of scale etc. – but at least the semblance of competition amongst supermarkets, as well as a fickle public, ensures that some of the benefits get passed on in reduced prices.
Is the corporate funeral world the only consumer service where it is the company that reaps all the benefits of greater ‘efficiency’ while the consumer bears all of the costs, paying more for a less personal service with increased inflexibility (without taking account of the bad practice we saw last week)?
I’d applaud any CAMRA like movement, but sometimes it seems as though our campaigns are chiefly focused on changing the world – maybe we simply need to make sure potential customers are as well informed as possible.
And, of course, make sure that independents really are offering something exceptional.
Charles
………..I couldn’t disagree more with ‘the departing Chair’s’ comments, way off the pace imo even before the screening of said programme seven days ago
andrew
Tosh. If I didn’t know better, I might think this bloke was trying to scare independent’s into selling more of his plans?
The problem is, how many really believe in them? Particualrly as the amount paid when the service takes place is so much lower than the fee extracted by GC from the client.
If I’m not very much mistaken (quite possible) Ireland is made up solely of independent funeral directors, I hope this gives you some consolation! Although the chairman’s comments are foul I hope this will spur on the independents even more.
yes, Henry, pure tosh…………
andrew
The problem we have is that so many funeral plans are sold by stealth. Age UK for example selling plans for dignity. The co-op being sold plans by insurance companies etc.
I recently made arrangements for one of my relatives and when she phoned the insurance company, the woman on the end of the phone was surprised they weren’t using the co-op and then carried on to try and talk them into using Fcare. Eventually my cousin lost her patience with her.
However gaining market share by attrition is very dangerous for the small operators because sooner or later all the funerals may be pre-need allocated to corporates.
The problem we have is one of communication to the consumer of our quality and price and yes the GFG and NDC are to be thanked for their part in communicating this. Although surely SAIF’s voice should be louder.
Interestingly is this not the same man whose son in law has an advert in the SAIF Insight as a consultancy to advise independents on selling their business…..