One of Britain’s biggest undertakers has said it will not introduce lower pricing for funerals until after the competition watchdog reports on its investigation into the market in September.
Dignity, which is stock market-listed and operates more than 800 funeral locations across the UK, said it needed clarity from the Competition and Markets Authority, which is looking into options including price caps and a national pricing mechanism.
“We are testing some pretty low price points,” said Mike McCollum, the chief executive of Dignity. “We are testing a wide variety of price points. The funeral mix continues to evolve in the light of new service offers and ongoing pricing trials and we continue to make good progress in identifying the best balance between price and service offer.
“At its core is a move away from a packaged service offering to an unbundled approach, where customers can personalise their own requirements.”
The company said the average price of its funeral packages – which range from £3,578 for a full service to £2,047 for a basic package – continued to drop amid fierce competition and as consumers seek cheaper options during a prolonged period of weak wage growth.
“As a consequence, more people are choosing the simple funeral,” he said. “We anticipate more downward pressure.” There has been rising demand for its Simplicity cremation service, which starts at £995. It is only available to book online or via telephone.
Dignity’s share price slumped more than 20% on Wednesday, after it announced a drop of almost a third in underlying profits before tax to £37.7m for the year to 27 December, prompting the company to scrap its dividend.
It said fewer deaths in the UK than expected had resulted in Dignity conducting 69,400 funerals last year, compared with 72,300 in 2018.
The company has also decided to suspend its wider business transformation plan, which includes reducing its 4,000 staff and the number of physical locations while bolstering online presence until the CMA report is published. Cost savings of £8m a year will not start until 2021, a year later than planned.
McCollum said the company intended to rationalise its sprawling brand presence. Its 820 physical locations use different established names, which was not effective in the increasingly digital funeral market.
“The web is arriving in the funeral space, and promoting one overarching brand is the way to go,” he said. “We are investing heavily in promoting the Dignity brand. We are investing heavily in digital promotion around our key brands [including Simplicity] and to make pricing web-friendly.”
McCollum would not comment on how the coronavirus outbreak could affect Dignity’s business performance.
• This article was amended on 12 March 2020. The Simplicity cremation service starts at £995, rather than costing an average of £770 as an earlier version said. This has been corrected.
