Darshan Patel was on the phone at the time while eating lunch and saw Mr Khandelwal run towards the door.
He said he could tell his fellow staff member was panicking so ended the phone call and dialled 111.
"I rung the police and, as I was trying to hold the door shut, the man smashed the window with his hammer."
Mr Patel was left with a gash on his arm.
"I then shouted to him what do you want and as soon as he said cigarettes and money I just said I would give it to him."
The man who was described as wearing a red hoodie ran out of the store with packets of cigarettes and hundreds of dollars.
A dog unit was called in but was unable to track the offender due to heavy foot traffic in the area at the time.
Detective Sergeant Darren Pritchard said, due to excellent information provided by the public, police were able to locate a vehicle in Riverbend Rd that afternoon.
"After police stopped the vehicle, stolen items from the supermarket were recovered."
Mr Pritchard wished to thank the public for their help.
"We are really grateful for the information we received which led to these arrests. We can't do it alone and any assistance from the public helps us keep everyone in our community safer."
A 42-year-old local man and three local youths were arrested at the scene.
One youth will appear in Napier Youth Court today and the other two have been referred to Youth Aid.
The 42-year-old man will appear in Napier District Court today.
