The first year I did this I probably gave away about 60% of my wardrobe and never missed a single item I parted with -- a number of which still had the store tags on them. Even though this frees me up to purchase new clothes as I need them throughout the year without filling my closet up to the breaking point, I find that it puts a small routine in the back of my mind that makes me far more frugal with clothes and as a result I buy very little. If I really need some specialty clothing for something, it's usually a tuxedo or something I can probably rent or borrow.
It's sort of a zero effort, self-documenting, positional tracking system.