I remember going to the closest WM to me, which isn't close at all( we're talking two buses and a train.. I'm in NYC), a few years ago and the fabric section was reasonable. There's a Michael's out on Rockaway Turnpike in Rosedale that I could have SWORN sold fabric too, but I haven't been to it since 2005.
I just went to the WM again last week and it was a disaster. I'm sure the craft section has shrunk to about 2.5 aisles, the fabrics were ok, but there was NO ONE to cut for me. I ended up leaving with just some things I didn't need service for, and found my way back to a Save-a-Thon to get the rest of the stuff I wanted. Sad. Very sad.
I loved Rag Shop too, and was just getting into sewing more when they fell in the hole.. I'm going to miss them. It's a shame how the big-box stores have gotten out of hand.