A little homespun and way out there - shopping in Reykjavik's central '101' district (it's a postcode), in Iceland, is all that and everything in between. From cosy woollens to all-things Bjork (her CDs have pride of place in all the music store windows), the main shopping district is the place to see what's on offer. Starting at the 'old city' end of Bankastraeti, visitors soon realise Icelandic fashion is more than jumpers, yeti hats and matching mittens (although there is plenty of that, along with T-shirts and stuffed Vikings, in the souvenir stores). Spaksmannsspjarir (11 Bankastraeti, tel: 354 551 2090) is an exclusively Icelandic boutique founded in 1993 by designing duo Bjorg and Vala. The store specialises in elegant women's wear in natural fabrics with a cool, neutral palette reflecting both the Icelandic landscape and the understated confidence of the country's inhabitants. Next door, b.young (tel: 354 562 3244) offers a range of funky, colourful designs, including Danish fashion brand mbyM and two Icelandic labels: bags from Ragga and clothes from Edda. ELM (1 Laugavegur, tel: 354 511 0991), by designers Erna, Lisbet and Matthildur, brings us back to the sophisticated simplicity of Icelandic sensibility. The brand's collections are rendered in black and white with a bright accent colour that changes from season to season. The fabrics are natural, with the highest-quality alpaca and pima cotton sourced from Peru. On a side street off Laugavegur is Kaffibarinn (1 Bergstadastraeti, tel: 354 551 1588), the trendiest cafe in town. Here, the air crackles with the sound of free Wi-fi but the ambience is all candlelit darkness and old wood. It was made famous in acclaimed indie film 101 Reykjavik as the haunt of nerd-protagonist Hlynur - and because it is co-owned by the movie's director, Baltasar Kormakur, and Blur's frontman, Damon Albarn. Step into the fascinating world of 'concept' store Kisan (7 Laugavegur, tel: 354 561 6262). The French-Icelandic owners have filled the shop with jaw-dropping items from around the world. Displayed among the clothes by Sonia Rykiel and Bonpoint, perfumes by Annick Goutal and shoes from Pepe, you'll find kosher soaps from Israel, recycled-paper notebooks, posters from Mumbai and retro children's books and toys, including a bizarre Avenging Narwhal Play Set (below). Wondering what the secret of Icelandic beauty is? Have a look at Jurtaapotek (2 Laugavegur, tel: 354 552 1103), which sells ointments, oils and teas made from local herbs and ancient recipes. Startart (left; 12B Laugavegur, tel: 354 551 2306) is a co-operative run by seven women. One of them, Gaga Skorrdal, makes all the woollen dresses, hats and ponchos, knitting from 4am to 11pm most days. For one-of-a-kind jewellery and wearable art, head to Ofeigur (5 Skolavordustigur), the atelier of master goldsmith and sculptor Ofeigur Bjornsson and his fashion designer wife Hildur Bolladottir. The store lies just downhill from the cathedral of Hallgrimskirkja. Visitors don't come here for bargain hunting but the rewards are plenty in the world's most northerly capital. Tourists can get 15 per cent VAT deducted on departure, so keep receipts and ask shopkeepers for a refund form.