At 2.55pm today a man entered Kakanui Store on High St armed with what was believed to be a firearm, police say.
He was wearing a dark jacket and his face was disguised by black cloth and sunglasses.
Officers are using dogs in the search.
Police told an Otago Daily Times reporter he could not talk to the owners of the store now as they were "not in a state to talk" to media.
A Kakanui resident at the scene, who asked not to be named, said at 5pm there were three police cars and six officers at the store.
Police were keen to speak to anyone who may have witnessed the incident, or who has any information about the man involved.
• Contact Oamaru Police on (03) 433-1400 or contact Crimestoppers anonymously on 0800 555 111.