Funeral Homes Face New Financial Pressures
Cremation, online competition and fewer rituals force adaptations
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An ongoing shift from burials to cremations, competition from online casket sales and a declining interest in traditional religious services have put financial pressure on the funeral industry to adapt to a rapidly changing market.
About half of Americans who died last year were cremated, and by 2035 the rate is projected to grow to 79.1 percent, according to a July report from the National Funeral Directors Association (NFDA). Since a cremation typically costs less than one-third of a funeral with burial, that shift alone puts a major dent in funeral home revenues.
The industry also faces rising competition from online retailers who sell caskets and urns and make it easy for consumers to compare prices, the report says. Revenue from funeral planning and body preparation services has decreased over the past five years, it notes.
Additionally, the demand for traditional funerals is declining. The share of Americans who think it’s important to have a religious component in a loved one’s funeral dropped from 49.5 percent in 2012 to 38.7 percent in 2018, according to the NFDA.
To cope with the new trends, funeral directors are changing the services they offer, according to Mark Musgrove, a funeral director in Eugene, Ore., and past director of the NFDA. These days, instead of traditional viewings and funerals, many families opt for “life-centered” memorial services, with videos and photo albums on display and microphones that mourners can pass around as they recall fond memories. Instead of somber organ music, many families are turning to boomer favorites, such as Beatles or Rolling Stones songs.
Many memorial services are staged away from funeral homes at nontraditional locations, including the grounds of a winery or even an athletic field where the deceased person once played, Musgrove says.
Families who choose cremation have options such as distributing the ashes to multiple family members in keepsake containers, Musgrove notes. And many seek personalized urns that reflect the loved one’s passion for golf or gardening or a college football team.
Despite the financial pressures, the NFDA report predicts that "increasing death rates and the aging population will keep demand steady and the industry stable."