"There is a marked shift from conspicuous to discerning consumption in luxury as the global economic climate worsens and consumer fatigue with mass marketed luxury products grows," states the new report titled Luxury: Considered.
"This has significant implications for the way luxury players do business in 2009 and beyond," it noted.
The report, authored by luxury specialist consultancy Ledbury Research and based on the insights of global luxury brand industry, consumer trend watchers, NGOs and trade associations, explores evolving consumer trends in the current economic climate and evaluates what these trends mean for luxury businesses.
It reveals that these new, more sophisticated drivers of luxury consumption are in evidence in developed markets like US and Europe where there are renewed calls for product quality, authenticity and value for money.
These buyers are also seeking exclusivity and have a heightened awareness of environmental, ethical and social responsibility.
While the wealthy in emerging markets like China and India are still driven primarily by conspicuous consumption such as status and prestige, the report noted that they are increasingly being influenced by their Western counterparts and that their purchasing patterns were transforming rapidly.
"The luxury industry has prospered in the last decade, fuelled by a wealth boom across the developed economies of the US, Europe and Japan and the burgeoning wealthy elite in China, India, Russia, Brazil and the Middle East," pointed out De Beers Group managing director Gareth Penny in the introduction.
But as the luxury industry prepares itself for harder economic times, Penny said it has never been more important to understand evolving consumer needs.
He said diamonds, for instance, were symbols of permanence and indestructibility in times of uncertainty, and while revered for their physical and emotional qualities, De Beers could not afford to be complacent.
Like other groups in the luxury goods industry, De Beers had to not only strive to meet consumer needs but also uphold the integrity of the brand's promise.
The report sees these findings as important for the luxury industry since this new breed of luxury consumer is expected to create a market for more high-end, high-experience products, which will present new business opportunities for brands.
As luxury players transform and new niche labels emerge, competition for luxury spend will intensify while product sourcing and supply chain standards will come under increased scrutiny.
The report suggests that the brands that can drive customer loyalty while at the same time respond to the demands of the new, discerning consumer, are the brands that will succeed in the future.
"Luxury has long been associated with superior quality, design and craftsmanship. But the tide is turning with a new breed of consumers who are seeking style with substance," said Stephen Lussier, executive director of the De Beers Group.
"These new consumers desire something more meaningful than just an expensive piece; they want brands to live and breathe their values through the way they do business. Our future success is entwined with our ability to ride these new waves of change," said Lussier.
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