Tuesday, April 21, 2009

The Death Industry - Always Recession Proof

“The honest-to-goodness truth of the matter is that everybody does die,” says 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.

And, let's face facts...as invincible as we may at times feel, and in an economic and political environment that changes with the wind, it is the one honest-to-goodness truth we all can believe. That is why funeral homes, crematories and cemeteries...otherwise known as the "death industry", is booming when the global and domestic economy around them is crumbling. I recently read that by most accounts, the real estimated average cost of a traditional funeral is over $8,000. $8,000!!! In a financial climate of 46 states reporting over-the-month unemployment rate increases and the jobless rate in all 50 states and the District of Columbia posting increases! (March 09, U.S. Bureau of Labor Statistics) How can that be? How can consumers continue to lose their jobs and their security...and when the final event of devastation occurs...the loss of a loved one...the death industry ruffles its feathers and zeroes in like a vulture to pick the remains of the fresh corpse and their families. It's just not right...but unfortunately...it is one of the other truths that we are forced to live with.

According to senior industry analyst Toon van Beeck, of research firm IBIS World, the revenue of the U.S. funeral industry will grow by 1.2% this year to a $20.7 billion dollar industry, which, in all fairness, is down from a 2% revenue gain last year. My heart breaks for their loss.

The annual death rate of 2.5 million Americans a year is expected to increase by about 1% per year, and expected to spike by early 2020 as baby boomers reach their mid 70's. Rest assured...this is just the famine before the feast for the death industry, as their mouths water in anticipation of the aging baby boomers dying off...and perhaps the push to sell pre-need contracts. While they have to accept their measly 1.2% growth during a period of the U.S. experiencing a decrease in 2008 annual GDP of 6.3% (March 09, U.S. Bureau of Economical Analysis), they have derived clever new ways to push their growth numbers back up, particularly in light of the growing interest in "green" burials and cremation, which analysts expect to account for 38% of deaths this year. Let's see what they're up to...

The Video Tribute: This is the newest innovation from enterprising entrepreneurs and funeral homes. The services range from creating a video tribute to the departed using photographs and other memorials to live web-casting or recording the funeral as it takes place. Funeral homes offer this service to the families for hundreds of dollars. That big hearted gesture just brought tears to my eyes...until they turned to tears of anger as I realized that the necessary "capital expenditures" of the funeral home was a laptop and an internet connection. Virtually all laptops today are designed with web cam capabilities and you just need the knowledge of how to stream it (many free on-line tutorials, it really is not difficult). If the laptop does not have this feature, a web cam can be purchased, ranging from $10 to $50. Even newer Netbooks, the smaller, more compact versions of laptops, have web cam capabilities. Once again, thank you compassionate funeral homes, for taking the emotional and financial situations of the bereaved into consideration when designing your promotional offers.

Casket Rental: As the cremation percentage rises, funeral homes are feeling the pressure on the typically highest priced, and highest mark-up item...the casket. So, they are generously offering those who opt for cremation but would like a viewing to rent a casket. I recently saw one funeral home that offered a "discounted" rental fee of $1,000 for a "beautiful and ornate" casket rental. What they fail to mention is that they purchased that casket at wholesale, up to 800% below what they would sell it to you for, and after only a few, if that, rentals, the casket has paid for itself but they continue to rent it for years at the same rate. Does the phrase "cash cow" come to mind.

Others are offering grief counseling referrals, with a kickback from the referral source, and what is referred to as "thumbies"...14k gold earrings, rings, pendants or other jewelry that is made from the thumbprint of the deceased. To each his own, but you certainly do not need to pay a funeral director a fee above what the jewelry cost to be made...there are literally hundreds of vendors who provide this service without the "commission" being paid to the funeral home to Google a jewelry maker and give you a referral.

Another way that families are saving money and personalizing funerals is to have the viewing and funeral services take place in their homes or other places, sometimes with the aid of a funeral director and others that do not. That is a whole different subject and one I will cover in my next entry...wait and see!

In summary, the death industry is basically immune from the economy, or any other factor, because they have a very specific and select prospect list...everybody who is alive today! Beware of special promotional offers and be smart when selecting the types of funeral and burial goods and services. There are innumerable ways to save money through a comprehensive and documented pre-need funeral plan, you just have to take the first step.

Please learn more at www.FuneralPlannersInc.com. Everyday, we help consumers understand their rights and help them protect themselves and their families, while saving money in the process...Guaranteed. An informed consumer is a prepared consumer, an we can help.

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