Back when I worked at Target, it was also this way. As I understood it, the system simply did not allow for a multiple item discount. The "3 for $4" ads did always say, in fine print, something like: unit price $1.33.

What got me was that a 12-pack of certain replacement razors was more expensive than three four-packs. I distinctly remember that one, having done a double take and checking my math with a friend.