Grave concerns: Dignity shares tumble after funeral war with Co-op livens up
Shares in funeral provider Dignity dropped by more than six per cent this morning, after its biggest rival Co-operative Group slashed the cost of its cheapest funeral and introduced a price guarantee.
The Co-op, which is the market leader, announced its price for a “simple” funeral – including collection, the preparation of the body and a hearse – would fall, with an extra discount for its members.
It also brought in a “guarantee to beat” commitment, which it says means it will undercut any like-for-like quote on funeral costs. It lowest standard price is now £1,895 in England, and £1,675 in Scotland, exclusive of third-party costs.
The move put pressure on Dignity, which already slashed prices at the beginning of this year, saying it anticipated “substantially lower” profits. The company has had a tumultuous year, blighted by market fears, competition and the spectre of increased regulation.
Competition is forcing funeral providers into heated competition, despite expectations of a lower national death toll being softened by an unusually high number of fatalities at the start of this year, and strong demand for premium funeral packages.
Dignity’s standing price for its cheapest funeral was already matched the Co-op. Analysts at advisory firm Peel Hunt said that if the firm tried to match the Co-op’s new prices, its profits would drop by £1.5m.
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Stretched household incomes mean that one in five Co-op funerals now use its cheapest package, four times higher than in 2015. Earlier this year, the company conducted research with YouGov that found as many as 4m people in the UK had suffered financial hardship after a death.
Robert Maclachlan, managing director of Co-op funeralcare, said: “Funerals are becoming increasingly price sensitive and in the last two years we have seen a huge shift in the number of clients seeking affordable funeral choices.”
In June, regulatory body the Competition and Markets Authority (CMA) launched a market study looking at the £2bn funeral sector, to examine whether information on prices and services was clear enough. The Treasury is also separately looking at the pre-paid funeral sector.
The average cost of a funeral in 2017 was £3,800, which the CMA said did not count extras that could add a further £2,000.
At the launch of the study, Daniel Gordon, senior director of markets at the CMA, said: “People can understandably be very emotionally vulnerable when planning a funeral. We therefore think it is important that – at what can be a particularly challenging time – the process is made as easy as possible.”