The two men entered Regent Night 'n Day, at the bottom of Regent Rd in North Dunedin, about 12.30am, said Senior Sergeant Mel Aitken, of Dunedin police.
On their way into the shop one of the offenders assaulted a bystander, knocking him unconscious. Once inside the shop they assaulted the worker behind the counter before robbing the shop of cash and cigarettes.
One offender was armed with a large kitchen knife, the second offender with a pistol.
"Of serious concern is the high level of violence used on both the member of the public and on the store worker prior to any requests for cash," police said in a statement.
Police are now seeking sightings of a silver Subaru GT station wagon registration DDE304 which was stolen overnight on Friday from the Corstorphine area and used by the offenders.
The descriptions of the offenders are one male wearing a balaclava and dark jeans carrying a knife and red plastic bag and the other offender is described as tall, wearing a black balaclava and hoodie and carrying a silver / grey pistol.
