The shopping in Cuenca is pretty good for a town this size. In addition to the many jewelry and leather stores along Gran Colombia, there are two regular markets to choose from, as well as a larger Thursday market, mainly used by locals.
The crafts market is organized into sections. There's the pottery section, the basket section, and of course, the farm implement section. I was actually searching for baskets and found a great variety of beautiful examples. Cuenca is a major center for basket-weaving, and you can catch a few people at work near the market. It's a pretty chill experience, as there are not many tourists and the vendors are pretty relaxed. I got a really uniquely shaped basket with colorful plastic ribbon woven throughout for just $2.
There is also an indoor artisan market in Cuenca a bit closer to Hotel Pichincha. Here they sell everything that the southern highlands are famous for--"panama" hats, delicate baskets woven of the finest straw, and carvings from tagua, the nut known as "vegetable ivory." There are also plenty of jewelry shops, small leather items, and musical instruments for sale in the market. Like many of the stores along Gran Colombia, the market closes for lunch from 1pm to 3pm.
In case anyone thinks along the same lines as me and thinks a city in which leather is so plentiful and relatively cheap would be a good place to buy a leather-bound journal, no such luck. I described the concept to many shops and the general reaction was, "Huh?" Unfortunate.