A price war is underway in the funerals industry after the Co-op lowered the cost of its basic service and pledged to beat funeral prices offered by competitors, denting the shares of its main rival Dignity PLC (LON:DTY).
The Co-op, the largest provider of funerals in the UK, on Monday said it would reduce the cost of its “simple” funeral by £100, to £1,895, plus burial and cremation fees to minimise the financial hardship felt by people after a bereavement.
READ: The Competition and Markets Authority (CMA) said in June it would review the UK funerals market to ensure that people were not getting ripped off
Dignity, the Co-op’s main rival, cut the price of its simple funeral in January to match the Co-op’s 2016 offer of £1,995. Shares in Dignity were 6% down at 969.50p in early afternoon trade.
The Co-op, which has around 1,000 outlets carrying out more than 100,000 funerals a year, also said it was committed to beating rivals’ like-for-like quotes.
While the direct costs of burial and cremation have risen, funeral directors have reduced their costs to compensate, Royal London's National Funeral Costs Index indicated.
The CMA launched an investigation in June to ensure consumers are not getting a bad deal on funerals and wants to see more transparency over pricing. The results will be published next summer but an interim report is expected before the end of this year.
Analysts at Canaccord Genuity said there was plenty of evidence that prices were too high and with the backdrop of the CMA investigation into pricing, it was not surprising that prices are falling across the funerals industry.
Chains such as the Co-op and Dignity which dominate the UK funeral market charge some 65% more than independent providers on average, according to research published on Monday by funeral comparison website Beyond.
Beyond’s research shows that the leading chains, who make up one-third of the market, now charge on average £3,771 for their funeral director services. The same services from an independent funeral director cost on average just £2,287.