Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 12, 1993 TAG: 9312140288
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: Kathleen Wilson Staff Writer
DATELINE: LENGTH: Long
Or consider the possibility of that someday QVC hawkers counting down the final minutes when viewers could order one of their specially priced caskets, sandwiched between the Marvelous Marcasite jewelry and Gifts for Under $50 hour with Wolfman Jack.
And could there be a warehouse-style store, maybe called Caskets `R' Us.
It may not be all so implausible.
A proposal pending before a committee of the Federal Trade Commission foresees the day when caskets might be purchased ahead of need and from someone other than a mortician. The same rule would prohibit funeral homes from charging so-called handling fees to clients who already have caskets.
Such fees- generally as much as $1,500 - have been charged in some communities to people who have, for whatever reason, opted to obtain caskets from somewhere other than the funeral home handling the other funeral arrangements.
While the proposed rules have drawn little public attention, they are controversial in the funeral industry.
If funeral homes were faced with competition from discount or wholesale casket outlets, the financial implications could be substantial - particularly for funeral operators who may fold some of their service charges in their mark- up on caskets or subsidize those fees with higher profits on casket sales.
While many funeral directors do not take so-called third-party casket operations very seriously, many of them, including morticians in the Roanoke Valley, say they are considering changes in the future.
Caskets account for $950 million of the $8.3 billion Americans annually spend on funerals, according to the U.S. Commerce Department's Bureau of Statistics.
Although those numbers suggest casket sales account for just 11 percent of total funeral costs, a sample of Roanoke Valley funeral homes suggests the average cost of a casket accounts for 38 to 48 percent of the total cost. That's assuming the customer orders what local morticians consider their full-service, traditional funerals.
In some markets, funeral homes no longer are the only source of caskets and their competition is having an impact on their business.
"When a casket store opens, funeral directors then have to take a look at their pricing structure so that pricing more accurately reflects operating costs," explained George Lemke of the Casket and Funeral Supply Association of America.
If a casket store were to open in Roanoke, said Sam Oakey, president and chairman of Oakey Funeral Service, he and other funeral directors would have to make adjustments in service charges to make up for profits lost on casket sales.
In fact, it has happened before, he pointed out.
"About 10 years ago here in Roanoke, cemeteries got into the vault business," he recalled. "We had to adjust our service charges to compensate for the money we were losing on vaults.
The Casket and Funeral Supply Association, a trade group, does not have a policy regarding third-party retailers. Lemke said most casket shops are opened by former funeral directors. That's because the typical funeral director gets 35 percent to 40 percent of his revenues from casket sales.
But often their biggest problem is buying caskets to sell. Most casket manufacturers have policies about to whom they sell and why.
"Many say they limit selling only to funeral directors, because they question the competency of the individuals running the third-party stores" to deal with customers who are bereaved, Lemke said.
But that raises legal issues for the manufacturers, putting them in a quandary over antitrust issues, he said.
"It's a wholesale mechanism," he explained. "You don't buy Coke from a distributor; you buy it from a retailer."
The National Funeral Directors Association says funeral directors should be allowed to charge fees for handling caskets so they can recoup operating costs that are not reflected in their other service charges.
"In short, [the] funeral service would have little option but to substantially raise prices," Lemke said.
People who don't understand why casket prices seem high, should call a local lumberyard and price various woods, he suggested.
It takes between 130 and 150 board feet of lumber to make a casket. For cherry or mahogany, the lumber alone for one casket costs $877, Lemke said.
And lumber, he said, is the least costly part of making a casket. The labor costs and the manufacturer's investment in machinery are considerably gher than the raw materials.
Most claim virtual wholesale rates from those you'd find at the local funeral home.
"It's not just happening in a couple of locations," said Lemke of the casket association.
"You'll find them in Tennessee, Texas, Illinois, Louisiana, and a bunch in Pennsylvania."
But a casket retailer who is considered the renegade of the funeral industry is in Memphis, Tenn. His Family Heritage Gallery is in the midst of arm-to-arm combat with local funeral home directors.
"You can save as much as $1,000 on the woods," claimed Cherry Tacker, who's husband, Al, runs the business. "In cherry, for example, it's $1,875 versus $3,000." The first price is what her store charges for a casket, the second is what she said a similar casket would cost at a Memphis funeral home.
The Tackers do have one big problem. It's next to impossible to get their hands on the merchandise.
Any casket manufacturer who'd sell to the Tackers would likely lose its primary customers, the traditional funeral homes. Many have threatened to drop that manufacturer as a source.
Tacker described her supplier only as "an out-of-town resource."
The Tackers opened the store three years ago and it's been an uphill battle ever since.
When one family approached the Memphis Funeral Home with one of Tacker's caskets, - whose parent company is Service International, which owns and operates Lotz and Rader Funeral homes in the Roanoke Valley - the funeral home refused to accept the casket.
The family sued the funeral home and the FTC fined Memphis Funeral Home $25,000.
"We looked at it this way: It's like having the Wendy's founder go over to McDonald's to cook hamburgers," said E.C. Daves, executive vice president of Memphis Funeral Home.
The FTC, however, saw it as a consumer issue.
"We were wrong," admitted Daves. Of the 1,900 funerals his home
services each year, Daves estimated that only 24 have involved clients arriving with their own casket.
"With a number that small, it's had minimal effect on our pricing," he said, adding that his home has never charged a so-called casket handling fee.
\ The FTC's proposal would amend the Funeral Industry Trade Rule, adopted about 20 years ago. That regulation was never intended to protect third-party casket retailers.
"The intention is the same as it was then," said Carol Jennings, an attorney for the FTC. "The purpose is to allow people to purchase goods and services they want and/or need.
"Charging a casket handling fee would defeat that purpose."
Imposing a penalty on the consumer who doesn't choose to buy a casket from a funeral home would defeat the Funeral Industry Trade Rule, she said.
Whether the proposal before the FTC passes, third-party retailers still will be faced with finding a supplier.
Batesville Casket Co. in Indiana controls the lion's share of the market, selling to 16,000 funeral directors.
An operating subsidiary of Hillenbrand Industries Inc. - also parent of Medeco Security Locks Inc. of Salem - Batesville Casket last year had operating profit of $92 million on sales of $426 million.
The company doesn't have a direct answer when asked if the firm would one day consider selling caskets to third-party sellers, said Christian Williams, director of marketing communications and public relations.
He related a story about a third-party retailer and a representative of another casket manufacturer literally came fist-to-cuff.
Williams wouldn't say which company it was, but added, "We're a Fortune 200 company. We don't beat people up."
When another major casket manufacturer - Aurora Casket, Co. in Aurora, Ind. - was asked about selling to third-party stores, someone who asked not to be identified replied flatly: "No."
Why?
"We only sell to licensed funeral directors."
What about Al Tacker of the Family Heritage Gallery in Memphis, who has been a licensed funeral director for more than 20 years.
Wouldn't that then suggest that Aurora could supply Tacker?
"Then we only sell to licensed funeral homes" they amended.
"That's just our policy."
\ Like many in the funeral industry, John M. Oakey entered through a wooden door.
A carpenter, he handcrafted furniture from fine wood.
But in the 1800s, when someone died, they'd bring him two sticks: one for how tall and one for how wide.
And Oakey would make a wooden coffin; a custom job for each customer.
"That guy probably never intended to get into the funeral business," mused Sam Oakey, his great grandson who now operates Roanoke-based Oakey Funeral Service.
Supply and demand eventually forced him to found the area's largest funeral home in 1866.
Sam Oakey's son, Sam, is a fifth generation funeral director.
"Once a woman told me my father made her a little casket for her dog," he recalled. "Lined in satin, with a little pillow."
\ Casket liners are surprisingly high fashion. Not only do they come in just about any color silk, satin or velvet, you'll also find some that look like hand-stitched quilts.
Batesville Caskets even offers a Kente cloth collection, specifically targeted for African-Americans.
Colors of metal caskets also follow trends, specifically those popular in the automobile industry, and E.C. Daves of the Memphis Funeral Home in Memphis, Tenn. Casket manufacturers say you'll soon find teal green caskets available, as that color is very popular in cars this year.
Daves describes a casket as "a refrigerator without a motor." Perhaps a better description might be "a car without a motor."
Indiana is often called the "casket capitol" of the United States. The headquarters of many of the largest manufacturers and suppliers are located in the Hoosier state.
\ chart - Funerals and Caskets, A Roanoke Comparison
by CNB