For high-end shoppers on Madison and Fifth Avenues in New York, the hottest must-have accessory for 2009 is not the crocodile cuff bracelet, the snakeskin clutch or the python leather purse -- it's the plain paper bag.

That was the consensus of a recent Penn Fashion Week panel discussion titled "Can Luxury Survive the Economy," hosted by Wharton. "It used to be that you'd buy a pencil just to get the bag" with an up-market label, said panelist Antonia Thompson of Robert Burke Associates, a strategic consultant for luxury vendors such as wedding dress designer Vera Wang, jeweler Fred Leighton and retailer Bergdorf Goodman. But extravagance isn't what it used to be. These days, even the have-a-lots are feeling pangs of recession. Since the economy has soured, consumers of luxury items have scaled back on their spending, and those still shopping are being more discreet.

"It's a little bit gauche to be ostentatious with your purchasing," said Roxanne Paschall, senior merchandising director at luxury Italian brand Bottega Veneta. Customers are asking for plain white bags, no boxes, or requesting goods be delivered later to their hotels. "They don't want everyone to know. They don't want to flaunt."

Sales of luxury goods worldwide could fall by as much as 10% this year, global management consulting firm Bain predicted earlier this month. In the U.S., where about a third of all luxury goods are sold, sales are expected to drop by 15%.

In a recent study by the New York–based Luxury Institute, 62% of wealthy consumers reported that the state of the economy has changed their views on luxury purchases. Some are more budget conscious. Others said that flaunting luxury right now is insensitive, and they would rather help others than spend on themselves.

Finding that even the super-rich are focused on frugality, luxury brands are groping for new ways to stay viable. During the Fashion Week discussions, some luxury retailers said they have had to cut prices, while others described wooing customers with new, more affordable products. Others shunned any type of discounting, arguing that price reductions would permanently sully the brand. Finding it harder to sell glamour, some luxury brands are hyping value and stepping up service. Nearly everybody wondered when -- if ever -- the heady days of free spending would return.