Posted On Dec 19th, 2022

In late October, Mieko Kayama’s mother-in-law died at the age of 90. She had been living in a nursing care facility after she lost her husband and began suffering from dementia.

Rather than splurging on a lavish funeral, Kayama, a 55-year-old resident of Tokyo’s Sangenjaya neighborhood, decided on a low-key service with only herself and her husband in attendance.

“We don’t have children and my husband has no siblings. My parents are quite old, too, and we don’t really spend time with our relatives,” Kayama says. “So we decided against inviting people and opted instead for a very simple ceremony before sending her to the crematory.”

All in all, and with extra flowers ordered to decorate the coffin, Kayama says it cost a little less than ¥400,000 ($2,950), around a third of the amount families typically spend on funerals in Japan.

When it comes to the business of death in the world’s third-largest economy, bigger is no longer better.

Kayama is among a growing number of Japanese people choosing smaller, cheaper options over large, traditional rituals in the rapidly aging nation — a trend accelerated by the pandemic and a phenomenon forcing a ¥1.5 trillion industry that has long been reliant on extravagant ceremonies to adapt.

In 2021, Japan logged 1.45 million deaths, the highest figure since World War II. Meanwhile, the government’s latest demographic statistics show monthly deaths this year consistently outpacing last year’s figures, indicating that 2022 will likely be another record-breaking year in terms of postwar death tolls.

In fact, the number of deaths is expected to continue rising as baby boomers reach their twilight years, with the figure forecast to hit 1.68 million by 2040, by which time those age 65 or older are expected to account for 35% of the total population.

What awaits Japan, then, is the next phase in a graying, shrinking society — an unprecedented period described as tashi shakai, or “death-laden society,” in which the nation and its crematoriums are overwhelmed by the ballooning number of deaths.

And while the situation may sound like a prime opportunity for the funeral sector to cash in, it’s not that easy. With community ties fraying and household budgets tightening amid rising inflation and a sluggish economy, undertakers are scrambling to carve out a niche in an increasingly competitive market.

Corpse hotels

Around a five-minute walk from Shin-Yokohama Station in Tokyo’s neighboring Kanagawa Prefecture is a nine-story building with an entrance sign featuring dainty illustrations of flowers and the word “LASTEL” — a portmanteau of “last” and “hotel.”

The peculiar-sounding inn is a so-called itai hoteru, or “corpse hotel,” several of which dot the nation’s urban centers. Part mortuary, part accommodation, the facility offers the bereaved an affordable opportunity to spend time with the deceased before they are sent to the crematory.

Corpses can be stored for ¥10,000 a day, and mourners can visit them at all hours during their stay. Small visiting rooms are prepared with altars and platforms allowing for coffins to be slid in and out. And for ¥150,000, families can spend the night with the recently departed in a suite furnished with beds, a kitchen, microwave, refrigerator and extra rooms with altars and plenty of chairs where funeral services can take place.

“There’s a real shortage of crematoriums in this area, and one-week waits aren’t uncommon,” says Masayuki Onoue, executive director of Nichiryoku Co., a firm specializing in funeral and cemetery services and the operator of Lastel. “So while family members wait for their turn, we provide a place where they can share some privacy with the deceased.”

The vast majority of funerals in Japan are Buddhist, and typically involve a wake for the immediate family, followed by a funeral the following day. During these ceremonies, guests burn incense at temples and other venues as hired monks chant sutras before an altar. The body is then carried in an ornate hearse to a crematory. Family and close friends later collect bone fragments for a cinerary urn, and the event wraps up with a reception.

While these rituals can cost anywhere between ¥1 million and ¥2 million or more, the trend in recent years has been to shorten and downsize the scale of funerals, primarily due to sweeping demographic changes.

The number of newborns is falling, with last year seeing a record-low 811,604 babies, while the number of couples who married also hit a postwar low of 501,116.

Meanwhile, the erosion of the nuclear family has seen a surge in older, often single-person households, especially in large cities. According to a 2019 government survey, there were approximately 7.37 million one-person households of those age 65 or older, compared to around 5 million in 2010.

With community networks weakening and fewer neighbors or friends to send the dead off, the necessity for large funerals is waning.

“Since the 2000s, there has been growing demand for kazokusō,” says Onoue, as he gives a tour of Lastel’s floors and facilities, including a vending machine selling tickets that can be exchanged for flowers. Kazokusō refers to ceremonies mostly attended by family and relatives, as opposed to those also inviting friends and co-workers.

“So there has been a gradual shift in demand toward smaller funerals over the past two decades,” he says. “Then the pandemic hit, turbo-charging the trend.”

According to a survey conducted in March this year by Kamakura Shinsho, a publisher and internet company focusing on funeral services, 55.7% of nearly 2,000 respondents who have recently arranged funerals said they chose family funerals, followed by 25.9% who went with regular ceremonies and 11.4% who chose chokusō, or immediately cremating the deceased without a wake or ceremony.

Results also showed that the average number of guests and amount spent on funerals both hit record lows since the biennial survey was first conducted in 2014, totaling 38 people and ¥1.1 million, respectively.

“The increase in average life expectancy, coupled with eroding neighborhood ties and the proliferation of smaller family units naturally leads to the scaling down of funerals,” says Kensaku Omichi, a management consultant at Funai Soken.

“Imagine retiring from work at 60 and living until 85. By then, many of your former colleagues and friends have either lost touch with you, are ill or have passed away,” he says. “And COVID-19 was the breaking point, since it gave people a reason not to invite too many guests to funerals. Looking ahead, I think smaller funerals will be the norm.”

Convenient funerals

Like many of its peers, Nagoya-based funeral parlor operator Tear had been investing in relatively large facilities — those around three- to five-stories tall and built on 600- to 700-square-meter plots of land.

“That was mainstream until the late 2000s or so, before the global financial crisis,” says Kohei Tsuji, head of the firm’s planning and management department. “Since then, the size of these venues has shrunk considerably. Now we typically look for 200- to 300-square-meter properties.”

An altar at a Tear funeral home in Noda, Chiba Prefecture. Tear, a chain of discount funeral homes, has seen its business grow by offering lower-priced ceremonies and a transparent pricing structure. | BLOOMBERG

An altar at a Tear funeral home in Noda, Chiba Prefecture. Tear, a chain of discount funeral homes, has seen its business grow by offering lower-priced ceremonies and a transparent pricing structure. | BLOOMBERG

Searching for ideal plots, however, can be tricky, as funeral homes are typically unwelcome in residential neighborhoods due to their association with death. A good location would be on a roadside with ample parking space. “When you look around, convenience stores check all those boxes,” Tsuji says.

Convenience stores are ubiquitous in Japan, with nearly 56,000 of them scattered across the nation. It’s not uncommon to see multiple 7-Eleven and Lawson stores, for example, popping up in the same block or standing across the street from each other. That also means competition is intense, and with the population shrinking, dozens or more shut up shop each year.

What Tear has done is remodel these out-of-business convenience stores into small funeral homes targeting modestly sized, family-centered ceremonies. It’s a clever way to save on expenses, and so far the company has refurbished five such properties.

But smaller funerals mean lower revenue and tighter profit margins. In Tear’s case, sales per funeral, which averaged ¥994,000 in September 2019, before the pandemic hit, now stand at ¥837,000. The average number of gifts handed out to guests in return for funeral cash offerings — a statistic the company uses to measure the number of attendees — was 136 in 2008. That fell to 38 by 2019, and now hovers at around 18.

“Once the pandemic completely subsides, we may see a return in the number of funeral-goers, but likely not to pre-pandemic levels,” Tsuji says. “That means we need to structure our business so we can remain profitable with current conditions.”

It’s not just funerals that are being forced to tone down.

Grave sites are pricey, especially in crowded cities such as Tokyo. Meanwhile, there’s a trend to move family graves from the countryside to somewhere more accessible as rural depopulation accelerates.

That has spawned cheaper and more high-tech alternatives to traditional burial sites.

When Kimie Suehara’s husband passed away eight years ago, she initially looked for a grave plot near her home in the capital’s Setagaya Ward, but soon gave up.

“They cost around ¥1.6 million or ¥1.7 million, and that’s not even including the gravestone,” says the 54-year-old mother of two.

Instead, Suehara decided on a nōkotsudō (charnel house) operated by a temple near her home.

“It came to less than ¥1 million in total,” Suehara says. “And it’s quite nice since it’s indoors and close to our home.”

Such facilities have become increasingly popular over the past decade, alongside other, affordable options such as jumokusō — tree burials that use trees as grave markers instead of gravestones — as families with rural ancestral graves give up taking care of their plots for better convenience.

Not all such businesses have been successful, however. In October, a building-type charnel house in Sapporo, Hokkaido, asked temple-goers to retrieve their kin’s urns as the organization filed for bankruptcy.

“These facilities don’t come cheap and significant maintenance costs are necessary to keep the automated urn lockers running,” says Yuusuke Wada, a funeral business consultant whose family has been involved in the undertaking industry for five generations in Kanagawa Prefecture.

“It’s a business model only sustainable in major cities,” he says. “The industry isn’t getting any larger, either.” In fact, the market for funeral-related businesses may be shrinking despite the growing body count, according to the Yano Research Institute.

In 2020, the size of the funeral business market was approximately ¥1.5 trillion, the market research firm said in a report, down from ¥1.81 trillion the previous year as pandemic-induced social distancing and travel restrictions forced funerals to downsize.

That rebounded to an estimated ¥1.61 trillion in 2021, and is expected to be around ¥1.69 trillion by 2030, still smaller in scale compared to the years preceding COVID-19.

“It’s like pizza. You’re using the same amount of dough, but spreading it out thinner and thinner,” Wada says, describing the state of the industry. “More demand and competition but smaller revenue — that’s what’s happening as consumers’ priorities change with the economy and demographics.”

That certainly applies to Kayama, the middle-aged Tokyoite who recently lost her mother-in-law. Kayama and her husband intends to keep things as uncomplicated as possible — even after death.

“Since there isn’t anyone that will succeed a family grave, we had my husband’s mother’s ashes sent to a temple to be looked after with other people’s remains in a group grave,” she says. “When it’s our turn to go, we want it to be just as simple.”

Original Post: Downsizing death: Japan's funeral industry at a crossroads