Funeral company Dignity was making ‘egregious’ margins, says bidder
Former CEO Gary Channon said the company had continued to make money by hiking prices.
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Your support makes all the difference.Funeral company Dignity pushed the gains from its rapidly increasing prices to its shareholders and did not invest in improving its products, the man trying to take over the business has said.
Gary Channon, whose consortium made an offer for Dignity in January, said that well-meaning staff at the company’s branches started to refer customers to its competitors.
The 45% margins that the company was making were “egregious, and unnecessary and unsustainable”, Mr Channon told the PA news agency.
Despite some falls in recent years, the cost of a basic funeral has more than doubled from £1,835 in 2004 to £3,953 in 2022, according to data from Sunlife. That is not including extras such as flowers, hiring a venue, headstones and the like.
People don't know the price of a funeral. And they're not in the mood to shop around when they're in a moment of need
The overall cost of dying was about £9,200, according to the Sunlife data.
Mr Channon, who was Dignity’s chief executive between April 2021 and May 2022, said that people are not keen to shop around when arranging a funeral for a loved one. These people are, naturally, in a vulnerable situation.
The extra money that Dignity was able to charge its customers did not go into investing in its business, Mr Channon said.
“It went to shareholders. At the heart of the strategy was a belief that you could raise prices faster than inflation, without investing in the proposition and you wouldn’t lose as much volume as you gained in value,” he said.
“People don’t know the price of a funeral. And they’re not in the mood to shop around when they’re in a moment of need.”
But yet some people did walk away from the business when it kept hiking prices.
When Dignity bought an independent funeral director it would often see declining business, but the higher price more than made up for this.
Between purchasing the business and today, the average number of funerals that each site performs has halved, Mr Channon said. “That’s how much damage has been done,” he added.
He said that under new ownership Dignity would continue with its current strategy, which has included reducing prices and offering cheaper direct cremations without a service at the crematorium.
Being in private hands would make it easier to make decisions that can benefit the company, he added.
Last Friday, the consortium of bidders for Dignity, including Mr Channon’s Phoenix Asset Management Partners, had acquired or had offers accepted for more than 75% of the voting shares in Dignity.