Even though physical cartridges are tiny, retail stores still have to manage them as part of inventory. I think the retail margins are relatively tiny on those (25% or less), but there is still room for a retailer to reduce price and still make a profit, particularly to clear out inventory. But, if some games are distributed to retailers by allotment, I can see a retailer reducing their price to increase volume and qualify to get more games in the next allotment.
OTOH, digital titles are sold directly by the console manufacturer in their online store. Yes, you can buy a code at the retailer, but I bet those pieces of cardboard have an entirely different distribution agreement. With less effective competition (since there isn't really any functional distribution to speak of), digital stores don't need to discount.