FUNERALS, PROFITS AND MARKET SHARE

In Australia, there are almost 900 funeral businesses that will handle more than 170,000 deaths, this year. Most of these deaths bring not just grief to many, but also profit to others. 

With 290 funeral homes and 16 cemeteries, InvoCare is by far Australia’s largest death-care corporation, claiming an overall market share of more than 34 percent (and growing). For funeral homes in some capital cities, like Sydney, Melbourne, Perth and Brisbane, their market share is even higher. They own most of the common funeral brands like White Lady Funerals, Guardian Funerals and Simplicity Funerals – which means that if you’ve ever searched for a funeral director, you’ve probably come across one of their funeral brands.

But unlike major corporations in other industries, InvoCare tends to charge more than most of its competitors. One study from the University of Sydney: It's your funeral: An investigation of death care and the funeral industry in Australia, found that InvoCare prices were  up to $1500 more per service. And in a recent story by the ABC 7.30 Report (10/6/2019), it was also reported that on average, InvoCare funeral brands are up to 22 per cent more expensive, than at independent rivals. A mystery shop by CHOICE (31 July 2019) also found InvoCare brands to be more expensive than smaller independent and family owned funeral homes.

'Although exorbitantly high costs for services might price most businesses out of the market, this is not the case with InvoCare and the funeral industry.'

There is a common story here. But here is the sting. Although exorbitantly high costs for services might price most businesses out of the market, this is not the case with InvoCare and the funeral industry. 

That’s partly because customers treat death with a different mentality when grieving. “Most people, when they’re making that purchase, either go where their family has always gone, or they just go somewhere close because they’re in a moment of grief,” said Peter Erceg, owner of eziFunerals. “They’re just not shopping around.”

While funeral planning websites like eziFunerals has facilitated a greater awareness of the funeral industry and a rise in consumers shopping around for funeral directors, it isn’t foolproof. 

‘The big funeral chains still maintain majority market share through limited competition and continue to keep their prices high because an uniformed customer, is an easier customer to exploit,” he said.

They have become immensely powerful and use this power and economies of scale to further benefit themselves and gain even more power, at the expense of grieving consumers and smaller funeral businesses.

“It is easier for them to sell a more expensive funeral to a customer who has no idea of what the competition is charging and no idea what the final cost of the funeral will be, until they actually show up.”

'InvoCare has become so successful, it’s investors believe InvoCare stocks will never die.'

That is hardly a surprise. Invocare has become so successful, it’s investors believe InvoCare stocks will never die. “The reality is that the grieving people who go to the InvoCare funeral homes and pay for funerals, are not InvoCare’s customers,” Erceg said. “InvoCare’s customers are their investors.”

Let’s face it. Few consumers, after all, have probably ever heard of InvoCare. When the company acquires an independent funeral home or cemetery, it keeps the original name, so consumers often mistake it for a local, family-run business.

“For other corporations such as Propel Funeral Partners, that are trying to get you to come in the door, it’s all about brand recognition,” says Erceg. “They keep the name of the family funeral home so people think that they’re dealing with this family that’s owned a funeral home for more than 30 years.” 

Market consolidation isn’t the only reason the big funeral chains have been able to profit from Australia’s bereaved. It’s the very business model these companies have adopted, targeting grieving people who don’t take the time to contact multiple funeral homes the same way they would for buying a new car. 

"People at their time of grief should at least know their range of options", says Erceg.