The dress is awful but it's very typical of what young girls are now wearing out. In fairness, she picked a nice colour.
If this is the type of thing she wants to wear she'll find a way, she'll borrow on, find a way to buy it, change in a friend's or the toilets or even shop lift.
How does she respond to bribery? As in if you like her choices, you'll buy two. If you don't, you'll only buy one.
Or if she wasn't one you don't like, she has to skip the next night out or has to do extra chores.
What about compromise? My mum used to have a rule, skimpy on top, covered on the bottom or vice versa. Never both.
Fir me, it would also be a case of pick my battles. If she's good in school, limits drinking, no drugs etc... more latitude on dresses if that's the only issue etc.