Consumers have opted for lower-priced alternatives to industry merchandise, hurting revenue
(PRWEB) June 04, 2014
The Funeral Homes industry provides memorial services and merchandise for the deceased and facilitates the arrangement of the burial or cremation of a body. According to IBISWorld Industry Analyst Leah Goddard, “Demand for industry services does not typically fluctuate with the business cycle but is rather a product of demographic factors and consumer preferences.” Canada's growing and aging population has resulted in the number of deaths trending upward over the past five years, boosting demand for funeral services. However, traditional and full-service funerals are costly and can put tremendous financial pressure on families looking to honour their loved ones. Consequently, a variety of cost-saving trends have reduced revenue and profit for many funeral homes.
Stagnant disposable incomes since the recession have motivated consumers to opt for lower-priced, simpler ceremonies and cremations rather than traditional funerals and burials. Moreover, there is a growing amount of discount retailers that sell caskets, urns and related products. As consumers increasingly purchase merchandise elsewhere, funeral homes lose revenue from sales of these items. As a result, industry revenue is forecast to marginally increase at an annualized rate of 0.3% to $1.4 billion over the five years to 2014. “Despite overall growth, the number of deaths and disposable income levels are anticipated to stagnate in 2014, resulting in a 2.0% drop in revenue during the year,” says Goddard.
During the five years to 2019, favourable demographic factors will drive Funeral Homes industry growth. As more baby boomers, or individuals born between 1946 and 1964, become seniors, the number of adults aged 65 and older is anticipated to increase. In addition, total health expenditure is expected to accelerate, raising the level of investment in medical research and development (R&D) and healthcare. The average life expectancy will grow along with advancements in medical diagnosis and procedures, enabling older individuals to live longer. As elderly individuals comprise the primary market for industry services, growth in the oldest portion of the population will benefit funeral homes. However, consumer preferences for less expensive and more environmentally friendly memorial options are expected to limit revenue growth during the five-year period.
For more information, visit IBISWorld’s Funeral Homes in Canada industry report page.
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IBISWorld industry Report Key Topics
The Funeral Homes industry conducts funerals and prepare the deceased for burial or interment. Funeral homes organize wakes, transport the deceased 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 81222CA).
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