The Temple of Thanatos was already in the Third District. Reno figured they'd be efficient about their scavenger hunt and headed toward Enchanted Clothing. It was a long-shot -- he didn't know if Little Bastard was still even on the island, and Ishida would likely have re-purposed the fabric by now. Who else would have use for little cactuar-sized sweaters? But it was worth checking.
Enchanted Clothing