We had a ton of clothing when DD was born and struggled with this same issue, our problem is more about space though.
We donate/consign/hand down to others as much as possible. We had lots of ppl be really generous with us, so I love handing really nice, worn-once things to other little girls!
We have kept one medium suitcase of stuff (which means I keep purging it lol). Mostly super sentimental stuff, GN stuff, and multi season stuff, you can pair a short sleeve shirt with a hoodie for large portions of the year, but the same cannot be said for flannel Christmas jammies :-). We are only planning on one more though, and the chances that no 2 would be a girl in the same sizes/seasons are pretty slim.
Plus DH would keep buying new clothes anyway, he is a clothes horse!