Stiff competition

14 April 2004

Few brands have a history stretching back more than two centuries. Even fewer are able to retain generations of customers for much of that time. But London funeral directors Levertons can claim both of these boasts. The business has been in the same family since 1789 and is an integral part of the commercial and social landscape in some districts of the British capital. “We have families who have used us for generations,” says director Andrew Leverton. Past clients include literary luminaries George Orwell and Joe Orton, not to mention services rendered to the British royal family. A long life in the death business is not uncommon in Britain, but even so, Levertons is an exceptionally old brand. Like many undertakers, Levertons was originally a carpentry firm, branching into coffin making and eventually providing the full ceremonial works. Alan Slater, CEO of the National Association of Funeral Directors (NAFD), says that even today a cottage industry approach remains: “A lot of our members are still builders and cabinet-makers. In rural areas particularly, funeral directors still combine these skills.” In an era when rationalisation and economies of scale are dominant, the British funeral industry remains primarily a landscape of local brands. One reason for this is that the business, to a large extent, remains a mystery to most people. Few of us will arrange more than one or two funerals in our lifetimes. Consequently when the time comes to pay a visit to the undertaker, not many of us know what to expect. Where expectations do exist, they are generally based on stereotypical images as portrayed on television or in films. Victorian show The classic British funeral is a Victorian invention. Andrew Leverton describes it as, “The hearse, lots of flowers, traveling in cortege – putting on quite a nice show.” The traditional funeral home of the public imagination is colorfully evoked by Slater of the NAFD: “Mahogany furniture, aspidistra plants, a ticking grandfather clock, a musty smell and an elderly gentleman out of a Dickens novel.” In fact, the modern reality is very different, but correcting misconceptions through standard brand building activities such as advertising is out of the question for most funeral directors. Leverton explains, “It is very difficult to advertise effectively because there is a taboo. It can be detrimental if you advertise in the wrong place. A considerable proportion of our clients come from old connections or word of mouth.” Consequently, undertakers go back to the basics of delivering the best quality services. They pay scrupulous attention to customer communications and the needs of their clients, and they cultivate respectability and trust within their communities. Christopher Gascoigne, Managing Director of Birmingham based Gascoigne and Sons – not quite as venerable as Levertons but still established for more than a century – explains: “The old way is often the best. For funeral directors the main asset is the name. In Britain we’re a pretty conservative lot, and ninety percent of funerals we do are the same. The best recommendation is always the last job you did.” Yet there are signs that even this most traditional of industries is undergoing transformation. Six hundred thousand funerals are performed in Britain each year, at an average cost of around £1600 -- cheap compared with countries like the US where the costs easily double. Total market value for the funeral industry in the UK is therefore around £1 billion. As NAFD’s Slater points out, this is less than the turnover of some companies. Private local firms such as Levertons and Gascoigne and Sons have around sixty percent of the market, with a further 25 percent in the hands the cooperative movement, which are societies formed at the height of the Industrial Revolution to provide good-value services to members. The largest of these, Cooperative Funeralcare, estimates it has 13 percent of the total market. Corporate groups control the remaining 15 percent of the market. The largest of these is Dignity, which has over 500 funeral homes across Britain. The Dignity Group was created in the mid-1990s by American incomers Service Corporation International (SCI), which acquired two regional groups. A management buyout in 2002 saw SCI largely retreat from Britain, though a shareholding in the company was retained. The arrival of SCI on British shores caused some consternation in the industry. Gascoigne says, “There have been big changes. Dignity brought a lot of concepts into funerals and were criticized. The large groups lack the personal touch. They try lots of gimmicks but they really need to get back to the core. You can be big and still offer a personal service.” No gimmick But one person’s gimmick is another person’s customer focused brand development strategy. Cooperative Funeralcare is Britain’s single largest funeral chain, performing 80,000 funerals per year. In 2002, they established the Funeralcare Forum, a public panel featuring leading media and charity personalities. This was part of what the company called a Funeralcare Initiative, and it included a new design concept for funeral homes. “We want to get away from velvet curtains and dark and gloomy interiors, and make them more modern, welcoming and bright to take the fear out of funerals,” says Cooperative Funeralcare spokesman Phil Edwards. While this is a differentiated strategy from traditional firms, it may not appeal to all. Gascoigne describes a recently refurbished Cooperative Funeralcare branch in Birmingham as “like something out of the space age. People see it as cold.” Dignity Funerals also promotes a more modern brand-led approach. Dignity’s corporate communications and marketing manager Lesley Ferguson believes a brand focus is essential in the changing social and consumer environment. “All services have raised their game in response to a more demanding client,” she says. “With funerals, clients make a distress purchase. Nevertheless they want to choose someone who is professional and flexible. We want the Dignity logo to be recognized and understood as representing service and value for money.” Factors such as increased mobility mean a change in the traditional balance between local brand funeral directors and corporate groups, Ferguson argues. “Having a recognized network in the country and a recognized brand gives clients confidence,” she says. Although Dignity is refurbishing its businesses with corporate colors, standardized literature and the logo on the fascia, where private firms have been acquired, the original identity is retained as a trading name. “We are making a small strategic series of acquisitions,” says Ferguson. “We trade under the original name because one of the big drivers is reputation and local knowledge. But we make it clear on every single branch that it’s part of Dignity.” In fact, the prognosis for the British funeral trade is bright – and Dignity might prove to be the pioneers of a new model for the British way of observing death. Slater of the NAFD points out that there is currently a significant amount of venture capital in the market, tempting private firms to sell up. The reason? Although presently the market is flat, around 2015 the baby boom generation will clock up its three score and ten. “At the moment, improving margins and increasing market share are the main challenges – thus [an investment of ] money into marketing from the big players,” says Slater. “But there will be a sharp increase in the death rate. The larger groups will take a greater share. But they’ll co-exist with the family funeral director. We’re not going to see their demise.” Instead, perhaps we’ll see a reincarnation of the funeral industry. By Stephen Gardner This article was originally published on brandchannel.com

 

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