Reykjavík has over 100 local shops offering wool, crafts, and Icelandic design. This guide highlights the best souvenirs and where to find them in the city.
Reykjavik is not a cheap shopping destination, and it is not trying to be. What it has instead is a concentration of Icelandic wool products, local design, food-based gifts, and independently run stores that stock things you cannot find anywhere else. The tourist-trap version, mass-produced puffin figurines and China-manufactured Viking helmets, exists alongside genuinely good shops, and knowing which is which makes a significant difference.
The main shopping area covers three streets: Laugavegur, Skólavörðustígur, and Bankastræti. Everything worth buying in the city is within a few minutes' walk of this triangle.
What to Buy: Best Icelandic Souvenirs
Lopapeysa: The Icelandic Wool Sweater
The most worthwhile purchase you can make in Iceland. Made from lopi wool from Icelandic sheep, lopapeysa are genuinely warm, water-resistant, and distinctive in the yoke pattern that varies by maker. A quality handknitted sweater costs ISK 15,000 to 30,000. Machine-made versions are cheaper but worth distinguishing from handknitted ones.
The easiest way to identify a genuine handknitted sweater is the label and the look of the stitching. The Handknitting Association of Iceland on Skólavörðustígur sells sweaters knitted by registered Icelandic women, and the quality is consistent.
Icelandic Wool Accessories
Hats, mittens, socks, and blankets in lopi wool are widely available and pack flat. The same quality distinction applies: look for Icelandic-made labels rather than generic tourist shop versions. A good wool hat costs ISK 3,000 to 6,000 and is genuinely useful both in Iceland and at home.
Icelandic Sea Salt and Smoked Salt
Among the best food-based gifts to bring home. Harvested from geothermally heated coastal waters, the salt is coarse, clean, and distinctively flavored. Available at food markets and the Kolaportið flea market. Prices run from ISK 1,500 to 3,000 per package, and they pack easily in any bag.
Skyr-Based Food Products
Skyr is a thick Icelandic dairy product with centuries of history. Skyr-based chocolates, skyr drinks, and flavored products are available at airport duty-free, Bonus supermarket, and most gift shops. They travel well and are genuinely Icelandic rather than generic Nordic packaging.
Icelandic Sweets and Chocolate
Saltlakris (salted licorice) is the most distinctly Icelandic candy experience and is available at every supermarket. Nói Siríus is the main Icelandic chocolate brand. Bonus and Kronan supermarkets have the widest selection at the lowest prices, significantly cheaper than the tourist shops on Laugavegur.
Craft Spirits from Eimverk Distillery
Flóki single malt whiskey and Vor gin are both produced in Iceland from local barley and botanicals. Available only at Vínbúðin state alcohol shops, which are the only legal off-license retailers in Iceland. Keflavik Airport duty-free is typically the cheapest place to buy them.
Fish Leather Products
Made from the skins of salmon, cod, and perch that are tanned to produce a durable and visually distinctive material. Wallets, bags, and small accessories in fish leather are available at several Reykjavik shops and are genuinely made in Iceland.
Norse and Viking Jewelry
Hand-forged jewelry featuring runes, Mjolnir (Thor's hammer), and Vegvisir (Viking compass) is made by several Reykjavik jewelers at the quality end of the market. Mass-produced plastic versions fill every tourist shop on Laugavegur. The difference is obvious once you look closely at the craftsmanship and weight of the piece.
Best Shops for Souvenirs in Reykjavik
Handknitting Association of Iceland on Skólavörðustígur is the single best destination for lopapeysa. All sweaters are made by registered Icelandic knitters. The selection changes as knitters submit new pieces, so no two visits are identical.
Rammagerðin is one of the oldest gift shops in Iceland, with multiple locations including one on Skólavörðustígur. The range covers wool products, Icelandic food gifts, design items, and books. More curated than the tourist shops and worth browsing for quality items.
66° North on Bankastræti is Iceland's premium outdoor clothing brand. Jackets, fleeces, and accessories are well-made and genuinely functional, which makes them a more practical souvenir than most. Not cheap, but the quality justifies the cost.
Geysir on Skólavörðustígur sells Icelandic-designed clothing, accessories, and homeware. A good destination for contemporary Icelandic design rather than traditional craft.
Nomad on Laugavegur carries a well-curated selection of Icelandic and Nordic design, ceramics, and gift items. Worth browsing for design-led gifts rather than traditional Icelandic crafts.
Kolaportið flea market near the Old Harbor is Reykjavik's only flea market, open weekends only from 11 AM to 5 PM. It sells secondhand goods, vintage items, Icelandic food products, and craft items at lower prices than the Laugavegur shops. Worth visiting to find things the tourist shops do not carry.
Blue Lagoon store on Laugavegur sells the full range of Blue Lagoon skincare products, including the silica and algae-based products used at the spa. Available without visiting the lagoon and genuinely Icelandic in origin.
What to Avoid
The large souvenir shops at the bottom of Laugavegur and near the main tourist attractions sell puffin figurines, Viking helmet bottle openers, and Iceland-branded merchandise manufactured elsewhere and priced for impulse buyers. Nothing in these shops is made in Iceland, and nothing can be bought more cheaply at Keflavik Airport duty-free before departure.
If your goal is genuinely Icelandic products, stay on Skólavörðustígur and the upper section of Laugavegur where the independent stores are concentrated.
The VAT Refund: How to Claim Up to 14 Percent Back
Iceland's VAT is 24 to 25 percent on most goods. Spend over ISK 6,000 at a qualifying retailer in a single transaction, and you can claim back up to 14 percent at the tax refund desk at Keflavik Airport before your flight.
Look for the tax-free sign in shop windows
Fill out the refund form at the point of purchase
At the airport, present receipts, unused goods, and your passport at the tax refund desk before check-in
For significant purchases like a lopapeysa or 66° North jacket, this refund is worth claiming. On an ISK 25,000 sweater, that is approximately ISK 3,500 back.
Practical Notes for Shopping in Reykjavik
Iceland is cashless, and cards are accepted everywhere, including small independent shops and the flea market. Laugavegur shops are typically open Monday to Saturday 10 AM to 18:00, with some extending to 20:00 in summer. Sunday hours are shorter, usually 12:00 to 17:00. Kolaportið flea market is open only on weekends.
Alcohol cannot be purchased in supermarkets. The state-run Vínbúðin shops are the only legal off-license retailers, with branches across Reykjavik, including one on Austurstræti. Keflavik Airport duty-free is typically cheaper for spirits and wine than city stores.
