(FORTUNE Magazine) – I USED TO BUY everything I wanted and never worried about price,'' says Melba Turner. No more. For the Turners, both 31 -- Melba is an accountant and Jerome is a marketer -- life has become one big quest for bargains. Melba explains, ''When we turned 30 we faced the reality that our resources are limited.'' Now the couple wants quality at the lowest price, whether for contractor services to restore their stately English tudor in New Jersey or for paintings to add to their impressive collection by African-American artists. They browse in the galleries but often buy directly from the artists -- at savings of at ; least 60%. Melba says, ''I've learned that you can always get it cheaper if you are patient.'' A few years ago, Anne McBride, 43, a vice president of MacAndrews & Forbes Holdings, did her buying at New York's toniest stores like Bergdorf Goodman. She could afford to pay top dollar with her substantial six-figure income. But now that she is divorced and saving for her teenage son's college expenses as well as helping to support her parents, she has discovered such discounters as Kmart and Loehmann's. ''I used to pay $1,000 for one suit,'' she says. ''Now I get three by top designers for $500.'' Among McBride's recent Kmart purchases is a fully lined business suit for $55. This one had no designer label, but after she put a $5 button on the jacket, her colleagues at work mistook the outfit for one by Adrienne Vittadini.

A former college administrator, Jim Moore, 27, had all the status credit cards. Then 16 months ago he left New York City for Sante Fe, New Mexico, became a hotel concierge, and took a $10,000 pay cut. Says Moore: ''I'm not buying into department store markups anymore.'' These days his clothes come from thrift shops, where he recently snared a Perry Ellis silk shirt for $20. HERE ARE today's intelligent consumers. All are enthusiasts of a sweeping trend that Grey Advertising calls ''downshifting.'' Explains Barbara S. Feigin, an executive vice president at Grey: ''Americans are taking charge of their lives and their wallets, and are reining in their spending in a major way.'' They are attempting to justify every purchase and maximize the value of every dollar spent. Says Melba Turner: ''If I see something I like, I usually think about it for at least 24 hours before I buy, and I only buy when the price is right.'' Frankie Cadwell, co-founder of the Cadwell Davis ad agency, calls these analytical consumers ''professional customers,'' and they did not appear overnight. During the 1980s tougher and more demanding shoppers were emerging, but they were focused primarily on product quality. When the recession hit, their concerns shifted to price. In a September 1992 poll conducted by the Roper Organization in which consumers selected the most important reasons for buying a brand, price surged past quality in the value equation by 17 percentage points. In 1985, by contrast, quality edged out price by two points.

Any marketer or manufacturer who wants to succeed in the Nineties has to understand these new intelligent customers, be they downshifters or professional customers or something called cross-shoppers -- or a combination of the three. What these consumers really want is top quality at the lowest possible price. They are no longer willing to pay for brand names if they cannot distinguish a qualitative difference between branded items and private label goods. Another Roper study in June confirms this point. The percentage of consumers who say some brands are worth a premium price fell from 45% in 1988 to 37% today. Responses to Grey Advertising's 1992 survey of consumer attitudes show that Americans' definition of value has switched from ''best in class'' to ''best in budget range.'' An impressive 86% of them believe that a higher price does not always guarantee better quality. Is this consumer retrenchment just a response to tight times? Not entirely. Grey Advertising reports that 72% of respondents say they will never return to their old spending ways. Listen to Anne McBride: ''Even if I won a $20 million lottery, I wouldn't go back to buying the way I used to.'' Consumers are making a structural change in their shopping habits -- one that is likely to endure. There are two reasons why. A slow-growing economy has shrouded in doubt the traditional American expectations for a lifetime of boundless prosperity. According to the June Roper survey, the percentage of Americans who consider themselves middle class fell from 57% in 1987 to 51% in 1992. Economic realities are hitting those big-time spenders, the baby-boomers, especially hard. With children to educate and their own retirements to plan -- and without sufficient savings -- boomers have less money to spend on consumption for consumption's sake. The baby-busters, those between the ages of 20 and 27, ever cynical about their prospects, are not replacing the boomers at the cash register. And the 50-plus over-the-thrill crowd remains its usual tightfisted self. The second reason is that consumers of all ages perceive products like cereal, diapers, or cigarettes as commodities, with little to differentiate one manufacturer's goods from another. Says Cynthia Cohen Turk, president of the research firm Marketplace 2000: ''If it is a commodity item and consumers see it in four different places, the lowest priced is the value item.'' What about brands that consumers really believe represent better quality? They are widely available through the discounters, so why pay more somewhere else? Taming their expectations continues to be difficult for those 78 million men and women born between 1946 and 1964, often called the TV generation for obvious reasons. Says retailing consultant Carol Farmer: ''Boomers have been raised on entitlement and instant gratification, so sacrifice is a staggering notion for them to grasp.'' But she believes the slump of the 1990s will do for this group what the Depression did for their parents and grandparents: provide them with an incentive for permanent behavioral changes. Take Ken Dychtwald, 42, head of the Emeryville, California, consulting firm Age Wave. During the 1980s, he and his well-heeled pals spent freely, going to the theater and fancy restaurants regularly. When the recession started and his income took a dive, he and his wife began spending more time at home with their family and friends. For the first time in his life, Dychtwald wandered into discount stores. Says he: ''With business beginning to pick up, I have no intention of paying three times as much for things. It feels foolish. I have a more sober perspective on what role materialism plays in my life.'' Now consider the case of Roger Anderson, from Coral Gables, Florida, who was chief financial officer of a company that went bankrupt in 1991. It took Anderson, 50, more than a year to find his current job as a telecommunications salesman, and it pays considerably less than the high five-figure income he was used to. ''Until a year or so ago,'' he laughs, ''my middle name was 'Pay Full Retail.' '' Now Anderson, a divorced father with custody of his two teenage children, hunts for sales and buys nearly all the family's groceries at Costco Wholesale's warehouse club, where he saves an average of 17%. ''Six months ago I'd have said this was a temporary change in our spending habits,'' Anderson says. ''But not now. It's become a game we play.'' Downshifting has been easier psychologically for those in their 20s, often referred to as the computer generation, or as Generation X because they have been overshadowed by the baby-boomers. Peter Kim, executive vice president at J. Walter Thompson, notes that these folks became discriminating consumers much earlier than the boomers did. Many come from dual-income or single-parent homes and shopped for the family as young teens. Generation X also grew up in the era of widespread discounting, so bargain hunting is the norm for them. Says Kenneth Macke, 54, CEO of Dayton Hudson, which owns the Target discount chain: ''My father bought his first TV set from the local Cadillac dealer because he knew that man knew quality. I bought mine from a department store because of the convenience of delivery. My kids bought theirs from Target.'' Members of Generation X, unlike the boomers, encountered the harsh job market early and have never expected endless prosperity. Says Wharton graduate Christopher McLaughlin, 23: ''I realized some time ago that I wouldn't have the same opportunities to make lots of money as people who started out in the early 1980s.'' More twentysomethings live with their parents than any previous postwar age group, because they cannot afford homes of their own. They also fret that Social Security may not be there for them when they need it. Says Jim Moore: ''I have accepted the fact that I will have to be responsible for myself for the rest of my life.'' The most affluent Americans, those over 55, whom advertisers nicknamed the Radio Generation, have been least affected by the recession. Their shopping patterns have not altered much because these Depression babies have always been thrifty. With the kids on their own and the big expenses like mortgages out of the way, older consumers are willing to spend -- but never without a deal. Says retired attorney Arthur Stern, 64, of Longboat Key, Florida: ''I have the Depression mind-set, and I live to get good value for what I buy. I've been going to discount stores for years.'' According to a recent telephone survey conducted by the Cadwell Davis ad agency, Americans age 60 and over say they are visiting discount stores like Kmart about as much as they did three years ago. But when they buy, over a third say they are purchasing the sale product more often than they did three years ago. HOW CAN manufacturers and retailers reach these new consumers? One way is to take advantage of their preference for private label products. To these canny customers, peas are peas regardless of who packages them, socks are socks, and what's best is what's cheapest. After all, private label goods, which usually sell for 5% to 50% less than the brand items, are often made by the same companies in the same plants as the pricier products. Magid Abraham of Information Resources, a research service, reports that unit sales of private label products in grocery stores reached 18.2% in 1992, up from 16.4% in 1989. During the second and third quarters of 1992, private label sales grew at more than twice the rate of those for national brands.

People like James Sayer, 33, a marketer for a small electronics company who lives in a New York City suburb with his wife and son, are the reason why. He says, ''We have been buying more store brands lately because we no longer want to subsidize the advertising and promotional costs of national brands. We think we get comparable quality with store brands at a discounted price.'' Magid Abraham agrees that private label goods, once considered chintzy alternatives, are closing the quality gap in many categories. Loblaw Cos., the Canadian grocery chain, is the North American champ of private label. Its President's Choice products are so renowned for quality that they sell in such U.S. grocery chains as D'Agostino. Two years ago, President's Choice brought out its own cola, which sells for 30% to 40% less than Coke and Pepsi and accounts for 55% of the cola sales in Loblaw stores. The company also makes Wal-Mart's store brand, Sam's American Choice. Wal-Mart is known to be exacting with its suppliers, and according to David Nichol, head of Loblaw's product development division, Sam's chocolate-chip cookie is made with 100% butter and is 39% chocolate. By contrast, Nichol says, Nabisco's Chips Ahoy contains vegetable shortening and is only 24% chocolate. Nabisco declines comment. Companies are introducing private label even into categories that were once considered bastions of brand loyalty, like cigarettes, cereal, and disposable diapers. Sales of discount cigarettes, including generics and private label, jumped 95% for the 52-week period ended September 16, according to Information Resources. Premium brands, by contrast, are on the decline. Security analyst John C. Maxwell of Wheat First Securities in Richmond says unit sales of Philip Morris's Marlboro, its biggest brand, fell 3.4% for the nine months ended in September. To shore up sales, Philip Morris has been giving huge discounts on Marlboro to cigarette wholesalers. The company's generic Black and White brand, less than half the price of Marlboro, is now its second- largest seller. The exorbitant price of premium cereals -- $4.29 for a 20-ounce box of Post Raisin Bran -- has prompted consumers to reach for private label alternatives. James Sayer complains, ''I could practically take my kid out to brunch for the same price as a box of branded cereal.'' So now his son, Jimmy, crunches no- name flakes from a nearby health food store. They cost a third less than national brands. As price conscious as consumers have become, they are still willing to pay more for products in which they have an ego investment. Just not as much more. The difference is the person who really wants that Ralph Lauren outfit is now willing to buy it at a factory outlet, where the price might be as much as half what the same garments fetch in the Ralph Lauren boutique at Saks Fifth Avenue. Says consultant George Rosenbaum of Leo J. Shapiro & Associates in Chicago: ''Stores that sell goods at a lower price than suggested retail are taking over retailing.'' Indeed, a whole industry, including warehouse clubs, discount stores, factory outlets, and off-price retailers, exists to sell many of the same brands that traditional department and specialty stores do -- at much cheaper prices. Customers don't believe they get the added value that full-price stores boast about -- helpful salespeople, alterations, home deliveries. Says Rosenbaum: ''Consumers were happy to pay a 50% markup to full-price stores because they felt a little degraded by going to discounters. Now lower markups outweigh prestige.'' Nowhere is this change in attitude more obvious than in Christmas shopping, traditionally the last redoubt of the department stores. According to a Shapiro survey, 43% of consumers said they bought their gifts at discount stores for yuletide 1991, vs. only 35% who went to department stores. The other 22% went to specialty stores. Various projections for Christmas 1992 suggest that more shoppers are expected to flock to the discounters than last year. Tactical Retail Solutions, a consulting firm, estimates that chains like Target and Wal-Mart will enjoy an 8% to 9% increase in sales this Christmas, vs. 2% for the conventional department and specialty stores. What better sign could there be that discount shopping has gone legit than that American Express wants you to charge your purchases at Kmart? This year Amex surveyed its customers and asked where they wanted to use the card. The reply: Kmart and Sears Roebuck. So after years of cultivating an elite image, Amex has won over Kmart and is courting the likes of Sears to persuade them to take the card. THE PROLIFERATION of discounters has given rise to an intriguing phenomenon known as the cross-shopper. Explains Margaret Regan, a human resource consultant at Towers Perrin: ''This is the person who buys a BMW but pumps his own gas, and who buys his suits at Brooks Brothers but goes to Kmart for his socks.'' Many cross-shoppers are what psychologist Maria Krieger of the Philadelphia firm BrainTree Research & Consulting calls ''rookie discounters.'' They are venturing into discount stores for the first time in their lives and, she says, are amazed at what they find. In an effort to capture more cross-shoppers, Kmart recently launched an ad campaign in which prosperous-looking women react with disbelief when one tells the others she bought her smart outfit at Kmart. The retailer is now offering customers name-brand cosmetics like Elizabeth Arden at 10% to 30% less than department stores charge. Another fast-growing segment of retailing is factory outlet malls. Just take a trip to Freeport, Maine, Reading, Pennsylvania, or Barstow, California, and you will find the top names in fashion and decorating, including Mark Cross and Brooks Brothers, sometimes in plain pipe-rack surroundings. Prices at designer outlets, which are mostly filled with the current season's offerings, are usually 30% to 50% less than at traditional department stores. But professional consumers like Melba and Jerome Turner have learned how to do better than that. They shop the factory outlets during holidays, when merchandise is marked down an additional 30% or so. At the election day sales in Reading, the Turners stocked up on Ralph Lauren towels and sheets and saved about 80% off the suggested retail price. For products like toys, computers, and hardware, consumers head to stores like Toys ''R'' Us and Home Depot. These merchants are known as category killers because they dominate a particular sector of retailing. Most category killers operate on markups of half to two-thirds those of traditional department stores, and consumers reap the benefits in low prices. For example, at CompUSA, a nationwide computer retailer that stocks more than 5,000 items, including top Apple and Compaq brands, the gross margin is only 13.5%. Thus, it can offer Apple's LC II 4/40 desktop computer for $1,149, vs. the list price of $1,349. Says publisher Elysa Lazar: ''Consumers hate to waste money these days, and why should they when they can get anything they could possibly want off- price?'' She should know, having made a career publishing such bargain- hunting guides as The Outlet Shopper's Guide, a book, and The S&B Report, a monthly newsletter about sales in New York City. Demand for her newsletter has grown 20% to 25% in the past two years to more than 10,000 subscribers. Men, notorious for paying full price whenever they fancy something, now make up 20% of the subscribers. Consumers are likely to focus on price for the immediate future in part because the lessons learned from the long recession will not be forgotten quickly. But there's another reason: Far from feeling deprived, these bargain hunters are proud of themselves for being smart shoppers -- and beating the system. Anne McBride, the high-income Kmart shopper, boasts about the hair bows she buys there for $1.98 -- $10 to $12 less than similar ones she used to pick up at Bloomingdale's. As drug dealers have long known, you can addict people easily to something that makes them feel good.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCES: DISCOUNT STORE NEWS, TACTICAL RETAIL SOLUTIONS, WALTER LOEB CAPTION: DOWNSCALE GOES UP Conventional department stores can't match the spectacular growth of the discounters. Warehouse clubs like Costco sell groceries in bulk, and category killers like Toys ''R'' Us have come on fast to dominate their specialties.

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: THE ROPER ORGANIZATION CAPTION: HOW AMERICANS SEE THEMSELVES Young people ages 18 to 29 are the most pessimistic in defining their economic class, according to this Roper survey taken in June. Those 60 and over are the most optimistic.