Funeral Industry News

Star Legacy, Casket Supplier to Wal-Mart, Looks to Partner With Funeral Homes in Employee Benefits Program

October 25, 2009

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Star Legacy, Casket Supplier to Wal-Mart, Looks to Partner With Funeral Homes in Employee Benefits Program

imageTRENTON,NJ?When news started circulating on Oct. 20 that Wal-Mart had begun selling caskets through its web site,many in the industry recalled Costco?s entry in the funeral service a few years ago. Although much was made of the foray at the outset, the numbers didn?t really cause funeral directors to lose sleep at night.

What Costco?s decision to sell funeral goods did do was to reinforce the notion that funeral service practitioners no longer had

a corner on the product market.The handwriting was already on the wall by then as third party retailers started springing up with

increased frequency.

Today, when a behemoth likeWal-Mart starts working your side of the street, things could get interesting, with the obvious

reaction being this will cause further downward pressure on retail casket prices.

?Wal-Mart represents a bigger threat than Costco since they have so many nearby locations,? said David Nixon, president of

Nixon Consulting, Chatham, Ill. ?Even though their caskets are only online, the retail power is the largest in the United States.?

?This is not an overnight cataclysm, but a slow, inexorable chipping away of pieces,? said Alan Creedy, president of Trust 100,

Raleigh, N.C. He seesWal-Mart?s entry into funeral service as part of ongoing trend toward unbundling.

To meet the challenge from third-party sellers, funeral directors responded by raising service charges thereby lowering their

casket margin dependence. However, as a whole, the profession is still not heavily tilted in that direction.

According to Nixon, it is the service charge that is the most frequently compared aspect of funeral service. Firms such as Everest

Funeral Package offer consumers funeral price comparisons, primarily on the service charge. As a result, there can be downward

pressure on the service charge as well.

Mark Allen, executive director of the Casket & Funeral Supply Association, seesWal-Mart?s entry into funeral service as a good

news/bad news situation. ?The good news is thatWal-Mart, like Costco, is putting the option of choosing caskets?domesticallyproduced

caskets ? in front of buyers.The bad news is that mass marketing a limited number of styles based on low pricing encourages

consumers to regard caskets as a commodity rather than as an important way to add meaning and personalization to the

memorialization process. Plus, it offers consumers yet another opportunity to skip the funeral director when planning a funeral.?

Prices of theWal-Mart selections range from $999 (for 18-gauge steel) to $3,199 (for a bronze casket).

Another Angle Unfolding

While most of the attention has been directed atWal-Mart, another angle to this story is unfolding. Supplying the caskets, urns,

jewelry, Mowers, and pet memorialization items toWal-Mart is Star Legacy Funeral Network,McHenry, Ill. Founded in 2006, the

company supplies funeral-related products to end users and also assists consumers with planning and preplanning funerals.

In addition toWal-Mart caskets, Star-Legacy currently supplies urns for Costco, and offers a wide range of funeral items for

the Internet site

Since 2007, Star Legacy has supplied funeral product as part ofWal-Mart?s employee beneLts program, which is separate from

Wal-Mart online.Through this program,Wal-Mart employees will be able to purchase funeral goods, including Mowers, urns and

caskets, just like life insurance is a benefit.

It is the vision of Rick Obadiah, Star Legacy president and CEO, to create a network of funeral homes as part of beneLt program

Star Legacy provides to major corporations such asWal-Mart.

?Our goal is to create a major beneLts program that has within it, as one of its components, a directory of afLliated funeral

homes,? Obadiah said. ?Because of our contacts in the mass market, we will be able to bring customers to that network.?

Other principals in the company include Joe Semon, director of manufacturing and product development, who has been in funeral

service for 43 years;Wes Johnson, director of information technology; and R.J. Grissoff, director of sales.

Michael Kubasak, a funeral director and long-time consultant and industry speaker, serves as a consultant for Star Legacy Funeral


?Wal-Mart employs a couple million [1.5 million] people and those people have deaths in their family,? Kubasak said. ?A part

of that network is going to suggest an afLliated funeral home to the employee.That is going to be the key ingredient for a funeral

home to realize additional business [from the network] through exposure to many potential buyers. Plus there will be the assurance

to the consumer that I am dealing the best funeral home in the area.?

A funeral director advocate for many years, is Kubasak concerned that his afLliation with Star Legacy will be interpreted as a

sign he is now a competitor? ?At present there may be funeral directors who see Star Legacy as a competitor,? Kubasak said, who

has been consulting with the company for about a year. ?However, as I, and other industry consultants and experts have been saying

for years, funeral directors must learn how to emphasize the service aspect and not look for the majority of their proLtability

merely from the sale of a casket.?

It is here where Obadiah and Kubasak are hoping funeral directors look at the overall plan and not just on the online casket

sales aspect.

?For us, we look at funeral homes, everybody in the industry as our potential partners, whether they are funeral homes, urn

suppliers or casket manufacturers,? Obadiah said, ?And our customers are the end users.We don?t view a funeral home as a customer

to buy our product, of course if they want to, they can. And that distinction is what differentiates us.?

Obadiah expects the speciLcs about the network to be rolled out to funeral homes no later than June 2010.

Kubasak added that if funeral directors walk away thinking thatWal-Mart is going to cause them to lose a casket sale, they would

be missing the most important point.The key word here, Kubasak said, is network. ?In a very short period of time, the network

is going to be in place,? he said. ?It is the network portion that has to excite the funeral director. It?s a great way for an independent

funeral home to get their name in front of a lot of potential purchasers in their marketplace.?

Reiterating a point Kubasak made at many a seminar, ?anyone can supply a box. In addition to Costco and retail casket stores,

we know of churches that build and provide caskets for their members,? he said. ?It is evident that anyone can supply a casket, but

very few people or companies have the skill, the ability to provide the sensitive, caring service when a death occurs. Few are willing

to make the investment in a facility and fewer less have the expertise and the experience and the know-how that funeral practitioners

possess in dealing with death and helping say goodbye?not just a typical funeral but to really help people say goodbye

in a meaningful way that may be entirely different from my father?s or my grandfather?s idea about what a funeral should be.?

According to Obadiah, Star Legacy is the ?manufacturer of record? for the caskets. Kubasak said that all of the metal caskets

are manufactured in the United States. All of the wood caskets, at present, he added, are imported from Canada. He emphasized

that Star Legacy caskets are not imported from China or Mexico.

Product is shipped from one of four warehouses (Pennsylvania, California, Illinois,Tennessee) with locations in Texas and the

PaciLcNorthwest expected to open by January 2010. ?We have an arrangement with FedEx, because our goal is to be able to blanket

the country with overnight delivery,? Obadiah said.

Look for a follow-up to this story in the November edition of the Memorial Business Journal

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