When I visited Oaxaca for the first time in the early seventies, the markets were still held in the streets and the ware was spread out on the ground.
There was a street where baskets were sold, another one for clay pots, toys, flowers, crafts, etc., only some food was sold in an indoor market. Women (mostly) were busy arranging, weighing or unpacking whatever they sold and some of them were still wearing their traditional outfits.
If you go today, you´ll need to get a cab to the outskirts of town where you´ll find a market with regular booths, where everything is sold in one place. I bet it´s more comfortable for the people who work in it, but from the artistic point of view, the change was for the worse and one gets the feeling the merchants are banned from the touristic areas in the center of Oaxaca. There´s no longer a reason to proudly wear ethnic clothing, as hardly any tourists venture to the edges of town. A similarly unfortunate decision was made by the local government when they banned artisans from the center square during the Guelaguetza festivities. They too were relocated in an artificially created market in a remote area. I wonder whether the officials in charge of tourism ever ask tourists what they like to see when they come to Oaxaca.