The main shopping streets are Laugavegur and its quieter, steeper neighbour Skólavörðustígur, which climbs from Bankastræti up to Hallgrímskirkja. Together they cover Icelandic design, wool, books, records, outdoor gear, and a thick concentration of small art galleries. The bigger but less interesting indoor shopping is at Kringlan and Smáralind, both a bus ride from the centre.
Iceland refunds VAT on purchases over 6,000 ISK at any one shop — pick up a tax-free form at the till and claim back at the airport. For souvenirs that are not lopapeysa wool sweaters, look for ceramics, salted liquorice, and the local skincare brands.