Here’s no surprise: Mom and pop-run hardware stores hate Home Depot. Indie record stores deride the middle-of-the-road offerings of Best Buy and Sam Goody. And guys who run lunch counters cringe when Subway opens a shop across the street.
NEARLY EVERY LOCAL, independent small business owner in nearly every industry complains about competing with the national chains. They say they just can’t match the inventory. They can’t beat their prices. They don’t have acres of free parking. Corporate giants like Wal-Mart are sucking the life out of Main Street, the small-time operators say. Aside from beauty parlors and jewelry stores, very few small businesses have held their own against the onslaught of corporate consolidation.
DAVID 1, GOLIATH 0
But family-owned funeral homes seem to be a true exception in the all-too-common David vs. Goliath scenario in which the big guy’s sign goes up across the street and sooner or later the little guy goes out of business.
“We’re not worried,” says Will Pumphrey, who serves as treasurer of his 150-year-old family business Robert A. Pumphrey Funeral Homes in Bethesda and Rockville, Md. Pumphrey is the sixth generation in the business, and he says that business is just fine. His family’s business holds about 1,000 funeral services a year. Business is by no means booming, but it’s steady. And for small family business that’s still good news.
Until the early 1980s, the funeral home industry was almost entirely composed of small businesses, says George Clarke, who heads Selected Independent Funeral Homes, a trade association based in Chicago. But during the 1980s, a handful of publicly traded companies started buying up the local operators. The rapid consolidation in the industry started to worry Clarke and his 1,500 member companies.
“Would it ultimately be three large conglomerates that would ultimately change the nature of the entire industry?” Clarke says.
In short, no. And especially not in Washington.
While the three major funeral industry corporations all have operations in the D.C. area, Will Pumphrey and John Chaplin, Pumphrey’s vice president and general manager, can come up with just a handful of corporate-run funeral operations in around D.C., which they say has at least 40 or 50 funeral homes, 90 percent of which are run independently. The big companies don’t have as great a presence around D.C. as they do in other parts of the country, particularly the South. And Pumphrey and Chaplin don’t expect much local expansion, in part because times aren’t quite as good as they once were for the publicly traded operators.
TROUBLED DEATH MERCHANTS
Houston-based Service Corporation International has more than 3,000 funeral homes across the country and booked $2.2 billion in sales last year, but lost almost $232 million and its number of employees shrank almost 14 percent from the previous year.
SCI, the largest funeral services company in the country, is also embroiled in a class action lawsuit in Florida, where more than 30,000 people have signed on accusing the company and two of its Florida affiliates of mishandling corpses.
The second-largest operator, Alderwoods Group, has about 800 funeral homes. It emerged from bankruptcy in 2002 after filing Chapter 11 protection in 1999 because it couldn’t meet its debt payments following an aggressive acquisition spree, reports Hoovers, an investor information service. Its sales shrank 3 percent to $883.5 million in 2002 and the company lost almost $234 million.
Louisiana’s Stewart Enterprises is the third-largest funeral services firm has about 300 funeral homes in North America, and while it earned $32 million last year, its sales slipped 13 percent to $581.3 million.
Clarke of Selected Independent Funeral Homes isn’t waiting around for the big companies to rebound. Several months ago his group went on the offensive and launched a campaign using its membership and the media to “educate” consumers about their rights when it comes to funeral planning, and of course, eventually chose an independently run funeral home, preferably one within Selected’s membership.
Clarke is specifically promoting the expansion of the Federal Trade Commission’s Funeral Rule, a law that requires funeral homes to give consumers a price list for 16 categories of goods and services they provide. He wants the FTC to broaden this rule beyond traditional funeral homes to all businesses who provide funeral services and merchandise, arguing that such a change would promote competition.
Pumphrey and Chaplin, who are members of Clarke’s group, say they’re trying to promote independent funeral homes with surveys and even tried to get some of their other independent companies in town to chip in on some local advertising, but they said their colleagues didn’t want to commit to the expense.
Instead of advertising, Pumphrey and Chaplin say they’ll continue getting business the same way they’d been doing it for the last 150 years, relying on a solid staff and their reputation.
NIGHTWORK
“Word of mouth is our biggest asset,” Will Pumphrey says. “We’re going to do everything we can do. We stress service ... we don’t stress bottom dollar, which the corporations are stressing.” Despite the trade group’s campaign, the corporations are not the independents’ major source of stress, Pumphrey and Chaplin say. The most pressing concern — attracting young people to the profession — is a problem the whole industry is facing.
In recent years, mortuary programs are teaching 50 percent fewer students than they once were and many of those who graduate often leave the profession after a few years. Perhaps, Chaplin says, they don’t like the irregular hours that often include nights and weekends.
An encouraging sign, however, is that more mid-career professionals in their 30s and 40s are moving into the field as well as retired workers who are taking part-time positions.
Copyright 2003 American City Business Journals Inc.