Where’s Grim Reaper When You Need Him?

Maybe Benjamin Franklin was only half-right when he spoke of the inevitability of death and taxes.According to a new survey of the funeral home industry released this week by the accounting firm Citrin Cooperman, the Grim Reaper might be coming for funeral homes next if they don’t adapt to the upheaval hitting the billion-dollar industry, which employs thousands of people in New York City.The survey found that funeral homes in the Greater New York area are reeling from falling mortality rates. The number of deaths in America fell by 15,000 between 2004 and 2005 while the population continued to climb.Making matters worse, cremations — a low-profit-margin way to say hello to the afterlife — are becoming popular. Cremations cost, on average, about a quarter of what a funeral does ($1,500) and now account for 25% of the services rendered by these homes, up from 16% five years ago.For funeral homes to survive, they will have to rethink their business model entirely, said Ed Horton, who directs Citrin Cooperman’s funeral industry practice and oversees the study. Undertakers will have to provide more services, such as estate planning and financial advice, or at least become a hub of advice for expertise they can’t provide themselves if they’re too small.“Until now, the funeral service has been body based,” he said, meaning that revenue came primarily from embalming and preparing the body for the service. “But now forward-thinking homes know it’s the knowledge you impart, such as helping clients with veterans benefits and advice on nursing homes, that will generate real revenue.”Otherwise, mom-and-pop funeral homes, which account for 80% of the industry in Greater New York, will all but die out within 10 years. “You’re going to see another round of consolidation in this business in the next couple of years,” he said, adding that the trend will apply to independent homes as well as chains.One funeral home weathering the storm is Joseph Farenga & Sons, in Astoria. It does about 450 funerals a year and services a primarily Roman Catholic and Greek Orthodox clientele, offering families services such as cemetery selection and pre-planned planning trust accounts.“I bet on that trend three years ago,” the home’s director, Gus Antonopoulos, said. “We’re not casket salesmen. People are buying services, not caskets.”Indeed, caskets have become a negligible part of a funeral home’s business as prices have fallen because discounters, such as Costco (yes, Costco) now sell them. Even the rock group KISS (yes, KISS) sells caskets.Mr. Horton’s advice to funeral homes is to “think outside the box” — no pun intended. That includes offering DVDs of a memorial service similar to wedding videos or meeting demand for the latest trend in funerals, so-called green burials that are environmentally friendly by eschewing embalming and using biodegradable caskets.Mr. Horton said many funeral home directors, who tend to be traditional, are not quick to adapt to these new trends. But in an era in which Celine Dion’s “My Heart Will Go On” is a crowd favorite at funerals, there is no question tastes are changing.Still, things will pick up for the industry, he said, if it can make it through the next decade, when baby boomers start dying. He predicts an industry boom in 2015, not just because dying boomers will bring the number of deaths back up to “meaningful levels.”“We are focused on ourselves,” Mr. Horton said, himself a boomer. “We will want a customized funeral. People are willing to pay for uniqueness in a funeral service.”

Where’s Grim Reaper When You Need Him?

Where’s Grim Reaper When You Need Him?

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