Over the weekend, one of our many readers posted a comment on a previous blog post about Dignity PLC’s report on what they tell us people ‘assume, want and expect from funeral directors.
We thought this comment deserved elevating to a post in its own right. So here it is. (Sorry about the illustration of a female in pink shorts as a reader though, we’re pretty sure it’s not an accurate depiction but it’s the best we could find).
‘Although this piece isn’t about “Quality and standards” and “Regulation” it is about the Dignity business.
I’ve long since ‘had it’ with the constant media spiel that Dignity dispenses, Nothing other than a total smokescreen aimed solely for the benefit of City Institutions/Brokers/Pension funds etc etc. who are only interested in profits, reducing overheads plus a healthy balance sheet, who on the whole know absolutely nothing about the Funeral and Cremation Industry. Those actively involved all of course employ ‘Analyst people’ with an interest in economics, figures whatever who regularly run a line over Dignity’s figures, i.e. expensively employed ‘bean-counters’. Those Dignity figures will tell them one thing only, exactly how Dignity are performing. What this doesn’t do of course is to give any idea of what the remainder of the Industry are up to. Said Analysts etc should spend an equal amount of time in looking at this excellent blog since without it, how can any comparisons be drawn……………….?
Consistently Dignity have taken a swipe at the Independent opposition by using the term “fragmented” without ever explaining the use of that term. Put simply, following results last year and earlier this year (together with the Share Price tanking) Dignity realised that they had to do something and as ever that involves a mandate in favour of an expensive Management Consultancy outfit, since that’s the sort of mandate that the Square Mile expects, Corporate Governance you know and again adding to the costs of a Funeral…………………….
Let’s have a look at their Crematoria as it’s not just the pure Funeral side of the business that I suggest is alos suffering, it will not be long (if not already) that they start to feel a real pinch in this area. For many years no new Crematoriums were built but over the past 10 + years, thanks to Westerleigh and Memoria that position has significantly changed. Take the fairly new Cromer Crem as an example, this has a forecast 1000 funerals pa. Previously the nearest Crem or should I say Crem’s were both in Norwich, both owned by Dignity. We all know that the standard Dignity Crem fee is approx £999 so that’s an almost certain annual loss in turnover of £1M from those two locations alone. Memoria also have another operation (Waveney Memorial Park) south east of Norwich which must have added to the ‘Cromer loss’. All in all Dignity must be taking a large hit in Norfolk, considerably in excess of the £1M already mentioned
Their Oxford operation I suggest is literally haemorrhaging. A few years ago Memoria opened a new site near Abingdon, all of those funerals would previously have taken place at Oxford. This operation, the South Oxon Crem (shows as per their diary,) 21 funerals during the coming week, admittedly an exceptional amount and 11 next week. Assuming 800 funerals pa, that’s another £800K that’s not rolling into Dignity’s coffers. Meanwhile down in East Devon, the now mature Southern Co-op funded East Devon Crem has taken a considerable amount of funerals away from what was a very busy Dignity operation in Exeter. That site alone has probably taken 500 funeral pa from Dignity. Basingstoke is another. The recently opened Test Valley Crem near Romsey has almost certainly affected Basingstoke, say 450 pa (and possibly more)
I’ve highlighted five Dignity Crem’s, which have almost certainly in total shown a Revenue downturn pa of at least £3M, probably more. Memoria and Weterleigh Crem’s are all cheaper than Dignity, so it’s not just the Dignity Funeral side that’s having a marked effect on ‘Funeral Poverty’, it’s their Crem’s too. I suggest that said Analysts may care to take this into account as well since the number of new Crem’s being built will almost certainly not decrease. Dignity have a monopoly/near monopoly with their Crem’s located in the Brighton, Chichester, Crawley and Leatherhead areas, all very busy but are at risk to new ‘operations’
I ‘sped read’ through the recent media hype that they’ve issued, gawd how much did that cost……….. There’s something about under-performing Branches and something else about separating the Branches from the Mortuary/Vehicle bases, Funny that, since I thought that that had always been their business model. And on under-performing Branches this is a ‘token offering’ to the Square Mile, those that current “u-p” are exactly the same as those that did, say five years ago, their under-performance has been mollified by consistently large price increases across the board. I know who some of them are and would be really surprised if there are more than 30% of the entire Dignity Branches who are significantly profitable. The plain truth is that what’s happened to Dignity during the past twelve or so months had been a long time coming, a very long time and the Management have surely been fairly arrogant during this time, in that “…..it cannot happen to us….”. Prices have consistently been ramped up to a level which cannot be justified and for whatever reason they just hadn’t accepted the power of the web and the constant on-line flow of information re prices etc from opponents, that’s pure arrogance in itself. Going back to “Corporate Governance”, the current main Board have seven members, there’s only one who has long term experience of the Industry, I suggest that they’re no more connected to the Industry than your average daily commuter
Where is the business going…………….? Can it go any further – closing a few Branches here and there makes no difference, surely they cannot increase the Crem fees again…….? It’s a massive business with much middle management. I could go on I really could……
There’s an additional dimension which never seems to be mentioned regarding the level of a Dignity funeral and the knock on effects that this has towards “funeral poverty”. Put simply, with Dignity feeling that they can keep their prices at X and X for the different aspects of a Funeral and if the ‘market’ continues to accept them, then it’s pure logic that other Corporates (who are also based in or around Dignity Branches) feel that they can also charge those amounts. On this blog, Co-operative Funeralcare have made a number of appearances, the third largest Corporate i.e. Funeral Partners have to date made just the five appearances on here. FP have grown significantly during the five or so years and seem to be in very much an ‘avaricious expansion mode’ with 160 shops (or thereabouts) to be precise. Clearly no ‘mom and pop business’. FP are no different than Dignity or F’care when it comes to on-line pricing, in fact they appear to be the most secretive. Later this week I’ll be posting on here current prices for both Dignity and FP for Funerals in the same location. Two highlights (sic) will be the cost of a local removal and for supplying a hearse. I’ll also throw into the mix, comparable prices from a mature local Independent
Finally I had intended to write something along these lines six or so months ago but as the ‘Dignity Plc issue’ per se has again appeared on here, felt that this was a good a time as any to go into print.’
Andre
Andrew Davies who was up until his retirement the operations director for Dignity and was an executive director.
He has since retired and his new replacement Andrew Judd who has funeral experience has been given the title of Director of Funeral Operations.
This is not a main board appointment so it is a shame to see that on dignity’s main board there is very little if any funeral experience directors now.
I think the time for corporate funeral directors and their practices are slowly coming to a halt. More and more people ask who I am owned by because they want to make sure we aren’t part of some big corporate machine.
All that seems to be happening with national chains is that they are seeking to industrialise funerals even more than they already have done.
Big, mass mortuaries (probably on an industrial estate or close to it) per county is how I read their report. Closing smaller offices that aren’t making money because independents are popping up close to them and offering exceptional value for money.
For years I believe they have squeezed every last penny from the public and now they are paying the price. In my opinion, they have been the reason for the increase in funeral poverty not only in their pricing of funeral services, but the pricing of their crematoria services.
How they have the absolute cheek to issue reports on funeral poverty, I will never know. They have lowered the cost of their “simple funeral option,” which if you call an office to ask about it isn’t “simple” it is “simplebasic,” (they literally say it as one word!) which suggests that the cost for this “simplebasic” option was completely overpriced in the first place.
All of this concern for funeral poverty is only because they don’t want to be the bad guy. They don’t want anyone else to see them as the bad guy either.
However, it’s really hard not too when shareholders want to see a return on their investment and it seems Dignity’s answer is mass mortuaries and fewer people to actually talk to in an office.
I wonder how long it will be before they do away with actual offices and everything is through a call centre and home arrangement appointments?
In some fields with predictable demand etc being large leads to economies of scale and price reductions. Because of the unpredictable nature of death and the individuality of each case that’s simply not possible and he corperates just seem to be adding massive overheads which do nothing to keep people out of funeral poverty. The necessity to drive internal costs down to keep shareholders on board seems to be leading to some of the things like branch closures and centralised mortuaries which I think are an attempt to instigate some economies of scale and drive internal costs down. I wouldn’t be surprised if such companies already have some system of internal cross charging which charges different parts of the business for services provided by other parts (e.g. a cross charge for mortuary facilities for example). In my experience most people want a personalised funeral organising experience and don’t want to feel like they’re on a death conveyabelt – again, that experience isn’t likely to come from a corporate who’s first loyalty is to shareholders. Also, Large organizations tend to have expensive middle management structures which again add to costs… I could go on.
Surely your correspondent ‘Andrew’ is using a nom-de- …oh!
Surely your correspondent ‘Andrew@ is using a nom-de-…oh.
no not a “nom-de-……” simply a case of me not including the ‘w’ when I was performing a ‘cut and paste’…………….
andrew
To plagiarize a leading politician: ‘Dignity plc… for the money, not for the funeral’.
And as promised…………………
I’ve chosen a location in the Southern part of England where all three Corporates are represented. The Corporates have four shops and the Indies have eight. The Indies have easily the largest cut of the cake (in the number of Funerals conducted)
These prices include removal and washing, professional charges plus a hearse and one limo. They do not include the price of a coffin, Crem fees, Doctor’s fees and/or anything else. They are all identical ‘Traditional Funerals’:
Dignity – £4,265 (inc Removal: £990; Hearse £695)
FP – £3,020 (inc Removal £630; Hearse £730)
Strong Local Indie – £2,075 (inc Removal £295; Hearse £265)
I’d expect Funeral care to be between FP and Dignity. I have no business connection to the Strong Local Indie
Andrew
My ‘hope’ that Dignity wouldn’t push the price of their Cremations into four figures has inevitably not materialised, fourteen of their locations now exceed £1,000 with prices ranging from £1,070 to £1,025
Here are a few interesting comparisons (all for the same time slots):-
City of London. 8.30am to 10am – £466; and 10am to 6pm – £864;
Putney Vale – again as per C of L – £297 and £599;
Mortlake – £365 and £595; and
Golders Green – £310 and £690
I’ve deliberately chosen London Crem’s which on the face of it (despite the price of real estate in the capital) offer what appear to be exceptional prices. The parent Company for Golders Green is a Registered Charity, The Cremation Society of Great Britain, Mortlake was established under it’s own Act of Parliament in 1936 and is owned by the London boroughs of Ealing, Hammersmith & Fulham, Hounslow and Richmond upon Thames, the other two are owned and operated by the City of London Corpn and LB Wandsworth respectively
Apart from the ‘peak time’ price at City of London, the comparison with Dignity’s prices are stark (to say the least) and replicate the gulf in the prices for their Funerals when compared to ‘the Indies’
Even though I was well aware of these prices, they further ‘underline’ the extent of Dignity’s contribution (sic) towards “FUNERAL POVERTY”
regards
Andrew
If you are contemplating having to arrange a Funeral for a relative or a close friend and have concerns regarding the content of this blog (regarding Dignity Plc) i.e. and as to the likely costs, then here is a link showing all of the shops/branches currently owned by Dignity:-
https://www.dignityfunerals.co.uk/funeral-services/arranging-a-funeral/find-a-funeral-director/
And if you also have concerns as to which Crematoria that they own, then here are details:-
https://www.dignityfunerals.co.uk/crematoria-and-cemeteries/crematoria/find-a-crematorium/crematoria-index/
regards
Your point about so many more crematoria being built over the last ten years or so is significant. I wonder how many of them are on greenbelt land and also not really needed. The land value sky rockets when permission for development is granted on previously almost valueless greenbelt land. So, if it is the big corporates who owned the land in the first place (and I don’t know whether it is or not), although the profits from cremation will drop as the business is split across more and more less efficient crematoria, the value of their property portfolio will go up. Maybe one day there will be country house hotels in place of redundant crematoria.
And the companies that make cremators will be doing well too.
And now for some Media/Financial reaction to the recently published ‘CMA Report’ into the Industry
‘The Times’ lead writer on Dignity is usually Alex Ralph, here are some extracts from his 30 November report:-
“….Officials have also put the spotlight firmly on Dignity and Co-op, the market leaders. Although it did not name them, the CMA accused the bigger firms “of consistently high year-on-year price increases”……………”The tone of the CMA has increased the prospect of the Regulator going beyond asking for greater visibility of pricing and suggesting stricter remedies…”
And being consistent with their PR spiel (my words) “….Dignity said that it welcomed the “focus in the Report on transparency and competition”. Again my words, well they had little choice imo
Alex also included the following comment from the Interim Report “….In findings that were widely interpreted to be references to Dignity and the Co-op, the CMA said “a number of these have now introduced lower-cost funeral options but this doesn’t go far enough to make up for years of above-inflation price rises” And from me, that’s 100% accurate
Moving sideways, how did ‘the Market’ take the Report as Dignity is the only quoted member of the LSE. Well not surprisingly pretty badly. Dignity’s shares yet again ‘tanked’ falling just under 16% to 847.5p. In the two and a half trading days since then, there’s been a further drop to 741p. Exactly twelve months ago they stood at £19.43, the current price represents a very worrying drop for Dignity and needless to say both ‘the Market’ and Investors are more than a little on ‘the spooked side’. Not quite in ‘free fall’ yet perhaps but………………….
Following the issue of the Report, the Broker Peel Hunt had this to say:-
“…….Peel Hunt cut its stance on funeral services provider Dignity on Thursday as the Competition and Markets Authority said it was launching a full investigation into the funeral market after identifying “serious concerns” over large price hikes.The brokerage downgraded Dignity to ‘sell’ from ‘hold’, citing greater risk on pricing as the CMA pointed out that the cost of arranging a funeral has risen more than two thirds in the past decade and almost three times the rate of inflation.
The CMA said that while some smaller funeral directors have sought to keep their prices low, other providers, in particular the larger chains, have implemented policies of consistently high year-on-year price increases.
Peel Hunt said it was already concerned that price competition was becoming a way of life for Dignity rather than resulting in a short term re-basement of forecasts. “However, the CMA’s language is significantly more strident than expected and includes crems as well as funerals. In addition, the spotlight is firmly on Dignity and the Co-op with the focus on the larger chains as well as reference to recent price cuts.
“The best case scenario is that the CMA just ends up asking for greater visibility on pricing. However, the tone of the statement suggests greater remedies will be required. This will put further pressure on pricing in funerals, but opens a new risk in crems. This is not a happy position for a business with net debt: EBITDA of 5.7x.”
Peel Hunt said there no immediate risk on financing given that the company is well clear of covenants, but a further material reduction in profits will raise this as a concern”
regards
Andrew
To ensure that the good people at Dignity Plc continue to receive such endearing blog posts (on here that is), here’s a link to some interesting Shareholder/possible Shareholder online chat stuff:-
http://www.lse.co.uk/ShareChat.asp?ShareTicker=DTY
regards
Andrew