Substitute one fabric with a more decorative one (7)
I believe the answer is:
replace
'substitute' is the definition.
(I know that substitute can be written as replace)
'one fabric with a more decorative one' is the wordplay.
'one fabric' becomes 'rep' (rep is a kind of fabric).
'with' means one lot of letters go next to another.
'a more decorative one' becomes 'lace' (I can't explain this - if you can you should give a lot more credence to this answer).
'rep'+'lace'='REPLACE'
(Other definitions for replace that I've seen before include "Provide a substitute for" , "Put back or substitute" , "Put back in original position" , "succeed" , "Substitute, supplant" .)