Icelanders knit crafty response to global crisis

Along Laugavegur, Reykjavik's main shopping lane, one crafts store is thriving in spite of the economic crisis. Well, not in spite of it – because of it.

Yarns, threads, needles, and fabric scraps are flying off the shelves at Nalin. The shop already ran out of the Danish materials it usually carries and is now running on locally manufactured wool products.

The financial crisis has dealt Iceland a devastating blow: unemployment is soaring, the króna has collapsed, and banks have been nationalized. In January, the island nation's government buckled under the protests of citizens, who say a measure of prudence might have prevented the economy from overinflating.

Icelanders are hardly sitting idle as their country is slammed by the global financial hurricane. In cutting-edge Reykjavik, many are turning to arts and crafts, both to save money and to make it.

"Those who can't afford to buy presents are making them on their own, and those who can afford them are mostly buying handmade Icelandic items because of the import limitations," says Nalin's owner, Helga Jona.

Take Hildur Yeoman. Before the banking crisis, she could make do with her salary as a sales assistant at Trilogia, a clothing store and gallery. Nowadays, the 20-something makes frequent trips across the street to Nalin to buy supplies for her line of crocheted purses that she sells. Ms. Yeoman also sells self-illustrated greeting cards.

Trilogia specialized in high-end British, French, and Spanish designer pieces. Until lately, it carried little Icelandic work. But because the government has prohibited the depositing of money in foreign accounts – the only imports allowed are necessity items, such as food – the store has been forced to stop ordering merchandise from abroad.

Knitting to the rescue?

Local designers – often one-person brands – have come to the rescue.

Trilogia now features necklaces from Arora Eir, headpieces from Thelma Design, rouched bags from Hidden Goods, and bow scarves from Gudbjorg Jakobsd.

"The well-to-do ladies are still going to shop for exclusive Christmas, birthday, or Valentine's Day presents. It's just that those who used to buy Alexander McQueen are now buying Thelma," Ms. Yeoman says, referring to the big-money British designer, Mr. McQueen, who commands up to $300 for a belt or a scarf and up to $1,200 for a necklace. The local one-of-a-kind accessories cost less than $150 each.

Some craftspeople have arts and design training, while others have non artistic day jobs and just happened to have paid attention when their grandmothers taught them how to knit those ubiquitous rose-patterned wool sweaters.

Boas Hallgrimsson is one of the latter. In his free time, the young schoolteacher runs a design community in a loft in the capital's hip 101 District. He sets up small shows for independent bands; his wife, Inga, does illustrations. They are joined by Jette Jonkers, a clothing designer; Myrra, a photographer; and Aron, a painter. All are regular citizens still fortunate enough to be employed: by day, they do their Clark Kent jobs, but after 5 p.m., they slip into their studios and become artistic Supermen.

Not far from the loft is more evidence of Icelanders' creative response to the crisis: the design shop Verslunin Herdubreid. Construction activity here has dropped 80 percent following the onset of the economic collapse in October. Architects Johann Sigurdsson and Elin Gunnlaugsdottir saw no sense in maintaining their architectural practice. So, they moved the white elephant to the basement and opened the Verslunin Herdubreid design shop in their firm's storefront.

The architects then contacted a few friends and artistic collectives, who filled the space with clothes, crocheted accessories, indie books, volcano-shaped chocolates, and wire teddy bears. Three weeks later, Verslunin Herdubreid opened.

Bryndis Sveinbjornsdottir, Hildur Jonsdottir, and Ottar Nordfjord – fashion designer, graphic designer, and illustrator, respectively – all answered the call.

How were they able to find so many handicrafts from creative sons and "dottirs" in only three weeks? For Mr. Sigurdsson, the store's co-owner, it's a jack-of-all-trades effect.

"We're only 150,000 people here in Reykjavik, so that means each one of us has to know how to do everything," he says. "And we really think we can do anything – arts and design included. Hey, that attitude is what got us into this financial problem. And it's probably what will get us out of it."

At another loft a few blocks away, actress Helga Braga was selling almost every item in her closet, from Dolce & Gabbana to top Icelandic designers.

"My husband, a carpenter, was laid off," says Ms. Braga, a fashion aficionado and former talk-show host. "This is one of the few ways I can get some extra money."

Nothing virtual about response

Elections for a new prime minister are scheduled for May and the new caretaker government has put an emphasis on maintaining Iceland's legendary social welfare. But some retailers doubt things will improve much for a while.

"At least there's a silver lining," says Sara Eysosdottir, owner and head designer of the psychedelic clothing store Naked Ape. "Because of the exchange rate, more foreigners are coming here, and they're buying what we've got in the stores: local design.

"And in a sense, the financial collapse has gotten young people busy," Ms. Eysosdottir says. "They have realized that they can't just be on Facebook all day; that if they want to survive, they're going to have to use their creativity and start making things to sell."