"Here they are, just having a go at Good Friday, which is a day which workers should be off and spending time with their loved ones, and also, for some, just observing the religious significance of the Easter break.
"Dragging people into work on Good Friday is absolutely disgraceful - and it's just pure greed," Watson said.
The Ministry of Business, Innovation and Employment did not confirm whether an investigation had started.
But Labour Inspectorate regional manager David Milne said they had reminded "major retail brands like Foodstuffs and Countdown ... of their obligations around restricted shop trading days".
"The Labour Inspectorate does not disclose operational details relating to the enforcement of shop trading, however businesses trading on restricted shop trading days can be fined up to $1000, especially if they have been previously warned and prosecuted."
Watson said the fine equated to little more than a slap on the wrist.
"Where's the incentive not to trade? This is a significant problem - that part of the law needs to change.
"There needs to be far more penalty against employers who breach the act flagrantly like this."
In a statement, Foodstuffs South Island defended the decision to keep the stores open.
"This holiday comes on the back of a very challenging year for the Queenstown and Wānaka community, who have been severely impacted by Covid-19 and the lack of international tourism to the area.
"Many businesses are struggling - the Easter holiday is a time where local tourism can provide much needed revenue for the local businesses and a real boost to the community.
"In situations like this, our store owners make an informed decision to put their community, staff and customers' needs first and we know the local community appreciates the ability to be able to access much needed groceries over the holidays."
They added that staff working on these days would be paid time and a half, and receive a day in lieu.
But they said if the stores were not open, the sudden influx of Kiwi holidaymakers would struggle to get supplies.
Watson said he didn't buy that as an excuse.
"What about the small to medium businesses - other businesses - that have actually struggled a lot harder than supermarkets have, that are actually doing the right thing and not opening today?"