Yes! I remember it well. Many of the large department stores had a fabric section including the high end store, Marshall Fields in Chicago, which is now owned by Daytons. It was great.
When large discount stores began to open, i.e, K-Mart, Venture etc. and women could get clothes at reasonable prices for their children, the art of sewing waned and the larger stores stopped selling fabric. I believe that it was also about that time that department stores changed the way their stores were set up. They eliminated counters and began to put in "cashier stations".