Spatially, its actually quite complex to make one long line (it will probably have to snake around your store, and you'll need those awful movable tape barriers everywhere to make sure everyone keeps in line - customers hate these) and then to make one long line split evenly into several end points is not easy either (doing this may also take up a lot of valuable floor space).
Also, you could just have a store layout inherited from the 60s and its too expensive to change it right now...
Oh, and airline ticket counters are routinely run this way.
Edit: Yelp says this line system has been eliminated. http://www.yelp.com/biz/target-emeryville-2
It felt more stressful, efficiency be damned. You spend more time at the "front" of your line (A,B,C) , waiting for the board to change. In a traditional system you can hook in behind someone and "zone out" / chat with your SO until you reach the register. In this system I felt like I had to pay attention the whole time and I was interrupted every time the bell rang, even if it was A's turn and I was in line C.
And they prefer to choose their own line rather than wait in a single-file line for the next available register—even though that set-up has proven to be faster, research on queuing shows.
Based on these data points, it would seem as though more crowded places use this optimization.