This is taken inside the Vík knitting factory. Here a bunch of old ladies knit sweaters, gloves and socks all day long. The speed at which they knit is amazing. Very many Icelandic women and some men (hey I can at least knit scarfs) knit classic Icelandic sweaters, but they are usually proud to finish a sweater in a couple of months. These old ladies however will turn a ball of yarn into a sweater in a matter of hours.
Most Icelanders knit their own or get sweaters from moms and grandmothers, so these mostly end up in tourist shops around the country. You’ll see Icelandic sweaters sold all over the island, either knit in this factory or by some local.
If you want your own before going to Iceland, check out Rebekka Guðleifsdóttir. She reached flickr fame when the Wall Street Journal named her the Web’s Top Photographer. She has some pretty amazing photos, most of which feature Icelandic wool sweaters she designs and sells.