Laugavegur

Great shopping ,lively at night

Quite a few of the stores sell the basic tourist stuff (jumpers, throws, etc.) but at the most expensive price- either wait until you are at the airport or try to look when exploring outside of Reykavik (I found cheaper prices at a little store near one of the waterfalls for jumpers/throws). In saying this, I got a very good deal at a little knitwear store on a merino wool and cashmere blanket, much cheaper than in the UK!

A fantastic street within 5 minutes walk from the hotel - full of shops bars and restaurants about 1km

Expensive but very pleasant area to wander round with nice places to eat and drink and and some unusual shops.