Paddy's Markets stall owners Eileen and Neuman Yip Lum have seen the dwindling numbers first-hand; they are the fifth generation of the Yip Lum family to sell pumpkins, watermelon and ginger at the markets.

"Us food sellers are still pretty busy but the rest of the market has quietened down because there are just more markets out there now," Mrs Yip Lum said.

The 150-year-old market has undergone many changes since it started life as a bunch of stalls clustered around the edges of a hay and grain market.

But the last decade or so has seen a proliferation of markets, particularly growers' markets, which have spread through suburbs such as Alexandria, Bondi and Marrickville.

Mrs Yip Lum, whose four sons also work at their Flemington stall, said this increased competition meant Paddy's had to evolve to attract everyday customers who might be drawn to more local, relaxed options.

"They've got all these new ideas to restructure where the stalls are throughout the market, to make it more attractive and bring people back. The Yip Lums are one of 900-odd Paddy's Market Friday sellers who received a letter from a recently hired Sydney Markets Authority business development manager informing them of extensive restructuring to begin in March.

Sydney Markets Authority's Shawn Freeburn told Fairfax Media the market would be reshaped, with only the seafood and fresh-food sections left untouched.

"We're trying to change the way Paddy's operates. We're trying to increase customer numbers and need to create a positive customer experience with a better vibe," Mr Freeburn said.

Key to the plan is re-allocating sets of stalls at the heart of the site to create a food court and public stage section as a refuge for shoppers in the bustling market.

The Sydney Markets Authority is also mulling over how to shift the stalls around to open up under-trafficked sections of the market to the 40,000 or so customers who stream through each weekend.

The stage will be used by children's entertainers, as well as for sales and auctions by sellers.

Mr Freeburn said they were also on the hunt for new sellers to cater to Sydney's many niche communities and tastes.

"We get people of all ethnicities at Paddy's, so we want to have butchers and delis that can provide for every multicultural taste as a way to draw people back in."