Funeral Homes in the US Industry Market Research Report from IBISWorld Has Been Updated
Falling per capita income during the recession and a rising number of inexpensive cremations have hampered industry revenue, but the industry's revenue is projected to improve slightly during the next five years as the population ages, naturally increasing the number of deaths in the United States. For these reasons, industry research firm IBISWorld has updated a report on the Funeral Homes industry in its growing industry report collection.
Los Angeles, CA (PRWEB) July 12, 2013
In 2013, the Funeral Homes industry is expected to record an estimated $15.9 billion in revenue, a 2.6% increase from the prior year. Over the past five years, revenue has grown at an average annual rate of 2.3%, led by increasing revenue from merchandise sales and greater customization offerings. The recession did take its toll on the industry, though, with revenue falling 3.0% during 2009 as a result of lower consumer disposable income and rising demand for inexpensive cremations. According to the latest data from the Cremation Association of North America, an estimated 42.0% of deceased persons were cremated in 2011, compared to 36.0% in 2008. Additionally, says IBISWorld industry analyst Sally Lerman, "during the recession, cash-strapped families turned to discount retailers and manufacturers to purchase caskets," which further depressed revenue for funeral home operators.
During the past five years, the price of funeral and cemetery services increased steadily. Given the high markups associated with funeral home merchandise, such as caskets, profit margins remain relatively high compared to many other industries. Due in part to high profit margins, the size of the industry has expanded slowly, with the number of funeral home operators increasing at an average annual rate of 0.8% to an estimated 25,429 in 2013. Market share concentration in the industry is low, and the majority of funeral home operators are small, locally owned, independent operations serving customers that live within 10 to 15 miles of the property's location.
During the period, the Funeral Homes industry's two largest operators, Service Corporation and Stewart Enterprises, where able to increase their presence. Market share is also rising for Carriage Services and StoneMor Partners due to these operators' aggressive acquisition activity. As demand for traditional funeral services declines relative to cremations, which generate less revenue, larger companies are increasingly purchasing smaller operations to improve their sales and expand the geographic markets in which they operate. Increasingly, these players are acquiring cemetery operations in conjunction with funeral homes. These operations typically have higher revenue with fewer relative costs, as more consumers are likely to choose funeral homes with a cemetery on premises.
Conditions are projected to improve slightly through 2018. As the population continues to age, the number of deaths in the United States is anticipated to increase. Still, revenue gains are forecast to be moderate for funeral homes as inexpensive cremations become more popular. In fact, the latest available data from the Cremation Association of North America projects that a greater share of Americans will choose cremations over burials by 2025. Rising competition from crematories, which are excluded from the industry, and the fact that cremations generate lower revenue and profit for funeral homes, will dampen the industry's future growth prospects. For more information, visit IBISWorld’s Funeral Homes in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that conduct funerals and prepare the dead for burial or interment. Industry establishments organize wakes, transport the dead and sell caskets and related merchandise. This industry includes funeral homes combined with crematories; however, establishments that primarily conduct cremation are excluded from this industry and are included in the Cemetery Services industry (IBISWorld report 81222).