Design a sexy, glamorous outfit for a night on the town, made from materials bought at a store that all the famous designers go to. Sounds simple, but there's a catch: the venue is no fabric store but is actually a popular Manhattan supermarket.   Fantasies of silk and cashmere fly out the window, replaced by panicked visions of plastic wrap and aluminum foil. Everything they will use must be purchased here. With a $50 budget and a mere hour in which to spend it, our twelve hopefuls have their work cut out for them. Tim advises them to be as unconventional as you can be and make it work.

Our top ten meet up with Heidi at Banana Republic studios. There, a new challenge is issued: design a holiday dress that fits in with Banana Republic's current collection and would appeal to their customers. Their two themes this season are "my grandmother's attic" in soft pinks and yellows, and "Art Deco," in black, white and silver. All leave with armfuls of their favorite fabrics.