This is just a rumor as of right now. I find it very unlikely that any major retailer (Wal-Mart, Best Buy, Amazon, etc.) will stop carrying physical video games within this generation of consoles. Sony and Microsoft are still both manufacturing consoles with disc drives, they will probably continue to into next generation at least if I had to guess.
We may see retailers like Wal-Mart or Best Buy stop carrying physical games on store shelves, and just offer them online only. For example, Best Buy here in Canada already has physical games listed on their website that are not carried in store and are only available online. They are usually just dropshipped from their supplier so they don't even have to carry stock.
Physical media, at least on mass scale, will come to an end at some point. But I don't see it happening for at least the next 5 to 10 years.