In order to do crafts with your children you have to get supplies and to get supplies you have to go shopping.  Here are some stores to help you out:
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Michaels is great for finding a huge variety of supplies from fake flowers to wooden objects to t-shirts.  They have huge collection of paper and art supplies good for crafts as well as art projects in school.
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Jo-Ann Fabrics is the place to find the supplies you need from the fabric for the dress to ribbons to buttons.  It's the place to go for fabrics of all kinds: lace, silk, felts and much more. 
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Consumer crafts is a great online craft shop similar to Michaels. They have everything from yarn to wood crafts to seasonal crafts.
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Dollar tree has tons of arts and craft supplies for only $1. How can you beat that?
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Cricut is the place to go for those looking to do professional looking DIY cuts.