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Thursday, Mar 28, 2024

Quick Loans Help Funeral Industry Cope With Price-Shopping Trend

Consumers are spending less money than ever on funerals and death processions, industry professionals in the Valley tell the Business Journal. Angeleno Mortuaries Chief Executive William Hawkins said his mortuaries are collecting fewer dollars per customer every year, causing a tighter squeeze on profitability. The company has 10 funeral homes throughout the San Fernando Valley, Antelope Valley and San Bernardino, including Angeleno Valley Mortuary in North Hollywood, Angeleno Mortuary in Van Nuys, Lorenzen Angeleno Mortuary in Reseda, Crawford Mortuary in Northridge, Chapel of the Valley Mortuary in Palmdale, Reardon Simi Valley Funeral Home in Simi Valley and Halley-Olsen-Murphy Funerals & Cremations and Antelope Valley Cremation Service in Lancaster. “Fifty-seven years ago, when I was a young teenager working in funeral service, price shopping was virtually unheard of. There is an increasing tendency on that … at least in the last 23 years,” Hawkins said. He pointed to several contributing factors behind consumers’ trend towards minimalism, including their increased access to competitively priced choices. Also, he said extended family members today tend to live further away from one another than they used to, driving down procession attendance numbers. For many, money presents the biggest hurdle. Hawkins said standard death care services at his mortuaries – including transfer, embalming, preparation, visitation, a funeral, casket, utility car, service director and all the paperwork – cost $6,000 on average, but that the industry average trends higher. Increasingly, he said, customers are instead opting for non-ceremonious cremation services, which can cost between $1,000 and $3,000. “Nationally, the cremation rate is (rising) 1 or 1.5 percent on average compounded every year … for the last 20 or 30 years,” he said. Lender survey According to a survey released in June by point-of-sale financier LendingUSA, funeral professionals ranked the top challenges facing their businesses as planning services that fit within the family’s budget (48 percent) and collecting payment (31 percent). Additionally, 70 percent of respondents said that families today are less prepared for the costs associated with funeral services than they were 10 years ago. LendingUSA, headquartered in Sherman Oaks, issues microloans to finance big consumer purchases in niche markets like funerals, pet care and cosmetic surgery. It is an extension of Cross River Bank in New Jersey, which originates all the company’s loans. With regard to funerals, “there’s a big curve in families looking for the least expensive option because they couldn’t afford a traditional burial anymore,” Merchant Engagement Manager Elaine Valdez told the Business Journal. Added Marketing Strategist Amanda Krebs: “Millennials are less wealthy than their parents. People aren’t saving as much, they don’t have as much for retirement and they certainly do not have the savings for an unexpected funeral.” For funeral homes, the benefit of the loans is that they can offer families more flexible payment options while still getting paid up front. Angeleno Mortuaries is a registered merchant with LendingUSA. Hawkins said the lender solves a big problem for company in that it eliminates delays and inaccuracies in insurance claim payouts. “(LendingUSA) verifies, with their expertise, the fact that the life insurance policy is enforced and is not contestable and that the claim will get paid. Once they have that verification, they pay us on behalf of the family for a modest fee. For us, we get paid. On many other kinds of insurance assignments, frankly, we haven’t gotten paid. … It has helped our accounts receivable.” Industry consolidation Consumer spending trends have created tough times for small, privately owned, family-operated mortuaries. “A lot of smaller funeral providers (are) going out of business, where they fall below a viability to manage the current environment,” Hawkins said. Since the mid 1980s, he said, the industry has been taken over by publicly traded, corporate funeral companies run by private equity firms. That trend has been exacerbated by the proliferation of online retailers, which Hawkins said offer urns, caskets and other products at prices brick-and-mortar homes can’t match. He said Angeleno Mortuaries has been lucky to achieve growth by acquiring small homes from retiring owner-operators who didn’t have a family successor and didn’t want to sell to a corporate chain. But that was before COVID-19 further complicated the landscape. With city regulators now prohibiting gatherings of more than 10 people in response to a recent surge of coronavirus cases, Hawkins said the few customers who want to splurge on funerals aren’t able to do so. “(The virus) is forcing more simplicity on the few families that don’t want it. There are limitations on attending gatherings. Apprehension of distant relatives to travel – all those things certainly add to a little uptick in cremation. Among people who still want a ceremony, they need to be drastically smaller. With that, people are probably slightly more inclined to go with a modest casket. In terms of flowers, prayer cards, memorial holders, stationary products and things of that sort, there’s less of that being selected and (purchased).” To stay relevant, he said, funeral homes need to be creative with video livestreaming, high-quality video presentations and cremation jewelry. “If you were to sum it up, those that are continuing to do well are embracing change and adapting,” Hawkins said.

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