A hanging sweater bag in a closet makes good storage for baby clothes. Most of the clothes can be folded to save space. Purge clothes after each season.
Even babies and young kids have seasonal wardrobes. You can re-use the same storage tub for two seasons. For example, label one side "winter clothes" and the other "summer clothes." In the summer, store your winter clothes in it and have the winter label facing forward, and reverse in the winter. This way you don't have to make room for four different bins. You can apply the same storing concept to other things as well.
Keep a bin or basket labeled "outgrown" in a handy place in the nursery closet. As you find clothes that no longer fit, put them in the bin. When that is full, move the contents to a storage space that is a bit more out of the way.
Sarah Giller Nelson