This comprehensive literature review delves into the failure factors of traditional, digital, and hybrid startups within micro, small, and medium-sized enterprises (MSMEs) operating in the retail industry. Spanning the years from 2012 to 2023, this study sheds light on the intricate web of dynamics contributing to the downfall of MSMEs in this competitive landscape. The retail industry has witnessed a remarkable evolution driven by technological advancements and changing consumer behaviors. Startups operating in traditional, digital, and hybrid modes are integral to this transformation. However, the high failure rate among these startups remains a pressing concern. A disheartening trend reveals that many MSMEs encounter significant challenges, with many failing to endure beyond their initial years. This review meticulously analyzes various critical factors contributing to retail startups' failure. The synthesis of insights from diverse sources highlights the intricate interplay of elements such as financial instability, lack of entrepreneurial competencies and attributes, ineffective marketing strategies, inadequate technological integration, unfavorable government policies, weak customer relationships, mismanagement of timing, and insufficient infrastructural support. The study underscores the imperative need to address these failure factors to cultivate a supportive environment for MSMEs in the retail industry. By dissecting the root causes of failure, this review provides a foundation for informed decision-making, enabling stakeholders, policymakers, and entrepreneurs to devise strategies that mitigate these challenges. In conclusion, this comprehensive literature review unravels the multifaceted tapestry of failure factors plaguing traditional, digital, and hybrid startups within the retail industry's micro, small, and medium-sized enterprises. The insights offered herein aim to contribute to creating a conducive ecosystem where startups can survive and thrive, fostering innovation, economic growth, and resilience in the ever-evolving retail landscape.