May be talking about the market at ErQi Square (the old section in back).
ErQi is just past SanBa square; head north down the hill, you'll go around a new store which is actually on the square and see an older building in back. The entrance is slightly hidden between some small shops but once inside head for the far section of the east end. Here there are tailors who will have catalogs of clothes they make. You can choose material there or head with them to the second floor to pick out something different.
The whole building is a big maze of cloth, tailors, ready-made clothes, luggage, bookbags, shoes (upper floor), and household goods. It's an excellent place to find cheap odds and ends like kitchen utensils and such. Also has sewing supplies and accouterments, I usually spend a few hours there each month. Go with a Chinese friend as very few vendors speak English and they all love to haggle.
Best place for sewing supplies if you have your own machine.