The funeral industry in WA is increasingly dominated by a handful of big players, including two listed companies that hold more than 50 per cent of the market after buying some of the state’s oldest operators.
Listed company Propel Funeral Partners provided a rare insight into how much money can be made from funerals when it bought one of Western Australia’s largest operators, Seasons Funerals, for $10.9 million last year.
Propel’s move into the WA market followed a series of acquisitions by another listed company, industry giant InvoCare, which controls 40 per cent of the $1 billion national industry and about 45 per cent of the WA market.
InvoCare operates 60 funeral brands globally, five of which have a WA presence.
Among them are Purslowe Funeral Homes, which was established in 1907 and has been part of the InvoCare family since 2003, and Chipper Funerals, which was established in 1889 and bought in 2007.
The third big player in WA is family-owned Bowra & O’Dea, which has nine chapels across WA.
NSW-based Propel Funeral Partners is following a similar acquisition strategy, having acquired 25 brands since inception in 2012, including six since the beginning of the 2016-17 financial year.
Propel entered the WA market last year with its acquisition of Seasons, before listing on the ASX in November.
Propel expects the impact of recent acquisitions will boost its average revenue per funeral by 2 per cent to $5,330 and the number of funerals by about 40 per cent to 9,907, for a total revenue of about $53 million nationally.
InvoCare’s share price has dropped 11 per cent to $15.98 since its rival Propel listed on the ASX, while Propel shares sit around $3.48.
Propel intends to continue down a growth path, noting in its prospectus that InvoCare can no longer rely on acquisitions to drive growth as it has done previously.
After the ACCC granted InvoCare approval to acquire major NSW rival Bledisloe Group in 2011 for about $114 million, it placed restrictions on InvoCare to prevent any further acquisitions.
InvoCare’s latest annual report stated it would begin a new ‘Protect & Grow’ strategy, referencing a four-year plan to spend $200 million maintaining and improving its brand, systems, and operations, including shifting from a brand-based to a location-based approach.
Author of self-help funeral guide What Kind of Funeral?, Peter Erceg, the brother of Seasons Funerals’ former owner Steve Erceg, said the InvoCare strategy would ensure its staff had a greater knowledge of all brands within the group, enabling them to upsell customers to higher-tiered packages from alternative InvoCare-owned brands.
Mr Erceg said funeral costs had already increased approximately 10-fold in the past 50 years, ranging between $4,000 and $15,000 at present.
Despite InvoCare reporting a decline in market share for 2017, it predicts its average funeral price will continue to increase with its ‘Protect & Grow’ strategy.
InvoCare said WA in particular had experienced an increase in competition, which was at odds with smaller players’ experience.
Smaller players
After writing What Kind of Funeral?, Mr Erceg said he noticed a lack of transparency throughout the death care industry and customer dissatisfaction, prompting him to launch the online funeral planning and bidding platform eziFunerals.
Mr Erceg said factors that concerned him about WA’s market were the lack of competition given the dominance of corporates, the lack of consumer awareness around what services were or were not independent, and the dearth of regulations to do with itemised pricing.
“The Funeral Rule is legislation in America, where funeral homes have to provide itemised quotes,” he said.
“In Australia, funeral homes sell packages, like bronze, silver and gold; with those packages you’re paying for things you don’t actually want or need, it’s not personalised, it’s what we call cookie cutter funerals.”
eziFunerals operates by listing independent funeral homes that subscribe to the platform.
Customers are able to create a customised form, detailing either desired conditions for their own funeral or the funeral of a loved one, which is posted for listed funeral homes to browse and respond to with an itemised offer.
“I’m trying to disrupt the business model,” Mr Erceg said.
“What I’m trying to do is create a platform where consumers can control the process and get independent funeral directors to provide them with transparent itemised pricing and value for service.”
Peter Erceg says eziFunerals empowers consumers and boosts market transparency. Photo: Antony Lockhart
Gift of Grace funeral director Stacey Farmer said it was tough to compete as a smaller player but the death care industry was slowly changing with platforms such as eziFunerals.
“It’s really hard to say we (Gift of Grace) are competitive because they (corporates) have such marketing power, so the main thing is promoting what the advantages are in using a smaller and more personalised funeral consultant,” Ms Farmer told Business News.
Formerly employed by InvoCare, Ms Farmer said she left that business in 2012 after she was unable to source a wicker coffin as requested by a customer.
“I saw a bit of a niche market there to supply a different sort of coffin, so started that business up,” she said.
“From there I remained interested in funerals and non-corporate funerals, more funerals that honoured the transition of the body.
“Traditionally the corporations really liked to keep things in-house, either in their own chapels or cemeteries where you have a limited time and know you can turn around vehicles and staff again; hence you can really plan.
“I prefer to give families as much as they need.”
Ms Farmer said consumers generally weren’t aware of the options available.
“You only know what’s been planted in your mind; through many years there’s been a veil of secrecy over the funerals industry that is slowly lifting through people like Peter (Erceg),” she said.
“People are now questioning whether they are getting value for money, people are now wanting accountability.”
Industry change
Ms Farmer said operations changed for independent funeral directors mid-2017 when Fiona Stanley Hospital ceased allowing businesses to use its morgue facilities to store and prepare bodies.
As it was the only WA hospital to provide that service, independent operators without the means to hold bodies (and without proof of access to such a facility) were at risk of losing their funeral directors licence.
Ms Farmer said businesswoman Paula Bell, who had previously worked for a large corporate, saw a window of opportunity and opened a central morgue facility for industry use.
