Answer
Groove deformation occurs when the compressive stress exerted by the retaining ring on the groove wall exceeds the yield strength of the housing material. This causes the groove wall to deform into a 'ramp' shape. As the load increases, the ring follows this ramp and expands radially (for internal rings) or contracts (for external rings) until it 'walks' out of the groove. In post-failure analysis, a 'beveled' edge on the groove is the primary indicator. This is common when steel rings are used in Aluminum or Magnesium housings without adequate safety factors on the thrust load calculations.