It sounds like your mother-in-law has a overshopping problem and I can see why you find it distressing. But if you must have an issue with your mother-in-law (and who doesn't?), this isn't the worst one to have.
Make sure your girls know when they are old enough that her shopping is excessive and that they shouldn't expect to have so many clothes their whole life and that you and their father have a more rounded value system. Perhaps your daughters would want to take some of the excess clothing to donate a shelter or children's hospital. Selling them is a great idea and put the money into a college fund. When the girls are old enough, they can sell them too, and learn early on how to earn money.
Can you refocus your MIL on something that would be more practical? Would she shop for food for your house instead or other items that you actually need? Could she drive the girls to places as a way of connecting with them instead of investing so much time and money in shopping? Tell your MIL that you think it's best to start saving for the girls' schooling and extracurricular activities and ask her to put money into an education fund instead of their wardrobe.
Have you asked your husband to talk to her? Perhaps she would be more receptive to him setting some limits.
If all these efforts fail, I would urge you to not let it disrupt your relationship with her too much. It's wonderful that your girls have a grandmother that participates in their life, even if it isn't in the ideal fashion.