The shopping on Kovalam's Lighthouse Beach strip is what you'd expect from a well-worn Indian beach resort: cotton clothing, hammocks, Kashmiri pashminas, silver jewellery, Tibetan singing bowls, Kerala spices, and carvings. Most of it is imported from elsewhere in India rather than locally made, and the prices are tourist-inflated. Bargaining is expected and 50% of the opening price is a common starting point.
The exception worth noting is Kerala-specific produce: spices (cardamom, pepper, cloves, turmeric) and coconut products (oil, coir goods) are genuinely local, and the quality is good. Cashews from Kerala — sold unroasted or roasted in small shops — are excellent. Ayurvedic herbal preparations and oils from the better-established pharmacies along the beach road are reasonably priced and the quality varies by manufacturer, so buying from a shop that explains what you are buying is preferable to the packets sold without explanation at souvenir stalls.
For serious shopping, Thiruvananthapuram is far more interesting — the government-run Kerala Handicrafts emporium (SMSM Institute) on Museum Road is worth a visit for fixed-price coir, wood, and metal goods. The Chalai bazaar is the real local market.