Madrid is a world design center. You'll have no trouble finding traditional crafts, such as ceramics, woven baskets, guitars, and leather goods, as well as a wealth of contemporary art and fashion pieces. Small, family-run shops and boutiques generally close during lunch hours, on Saturday afternoon, and on Sunday.
Madrid has three main shopping areas. The first stretches from Callao to Puerta del Sol (Calle Preciados, Gran Vía on both sides of Callao, and the streets around the Puerta del Sol) and includes the major department stores (El Corte Inglés and the French music, book, and electronics chain FNAC) and popular brands such as H&M and Zara.
The second area, far more elegant and expensive, is in the eastern Salamanca district, bounded roughly by Serrano, Juan Bravo, Jorge Juan (and its mews), and Velázquez; the shops on Goya extend as far as Alcalá. The streets just off the Plaza de Colón, particularly Calle Serrano and Calle Ortega y Gasset, have the widest selection of designer goods—think Prada, Loewe, Armani, and Louis Vuitton—as well as other mainstream and popular local designers (Purificación García, Pedro del Hierro, Adolfo Domínguez, Roberto Verino). Calle Jorge Juan, Calle Lagasca, and Calle Claudio Coello hold the widest selection of smart boutiques from renowned Spanish designers such as Sybilla, DelPozo, and Dolores Promesas.
Finally, for hipper clothes, Chueca, Malasaña, and the streets around the Conde Duque cultural center are your best bets. Calle Fuencarral, between Gran Vía and Tribunal, has the most shops in this area with outposts from Diesel, Adidas, and Footlocker, but also local brands such as El Ganso, Adolfo Domínguez U (selling the Galician designer's younger collection), and Custo as well as some cosmetics stores (Madame B and M.A.C). Less mainstream and sometimes more exciting is the selection you can find on nearby Calles Hortaleza, Almirante, and Piamonte and around the Conde Duque cultural center.