Microsoft Purview Data Lifecycle
In order to improve the consistency of how retention labels and policies work in SharePoint sites, going forward retention labels published to a group-connected SharePoint site will require the retention label publish policy to select the “Microsoft 365 Groups” location. Once this change rolls out, only those retention labels published to “Microsoft 365 Groups” locations will appear within the dropdown selection menu for the corresponding group-connected sites.
When this will happen: