He said the man went to his car to find $4 but he didn't have it and returned to the shop where he then shouted racial abuse at the worker, who comes from India.
According to multiple witnesses, the man then left the store again heading towards his vehicle in the car park - continuing to racially abuse the worker.
A man nearby heard shouting and came to see what was going on.
"He came out of the liquor store all amped up and he went to the boot [and] kept raising his arms saying 'I'll kill you, I'll f***ing kill you'."
The bystander said the man kept raising his arms as if to feign holding a gun, but eventually went to the boot of his car and pulled out a hunting rifle.
At the time this was happening, a woman was just pulling into the car park.
"When I pulled up outside the liquor store I saw a man swearing and causing commotion in the car park – he was clearly pissed off with the shop," she said.
"I watched him then open his boot and start unwrapping something. I was worried he was going to pull out a crowbar or something but then he pulled out a rifle with a scope. I couldn't really believe it."
When the man moved to walk towards the shop with the rifle, the woman rang the police.
A woman got out of the man with the rifle's car and convinced him to put it away and they then left, the witness said.
The store worker who had the gun pointed at him said there were children in the store with their parents and he was frightened about what was going to happen.
"I've never had those incidents.
"It does happen now and then, but not with a gun. We get people yelling at us, racist comments are common."
He said he now felt unsafe at work.
"Every day I come to the shop it's like 'oh God, I don't want those customers coming in'.
"Even when they yell and that [abuse], I don't deserve that."
The woman who arrived as the incident was unfolding said she was shaken up.
"It was really frightening, I just never expect to see a gun pulled out like that in Whanganui. I am so glad that no one was hurt.
"I'm really upset that people can just go around and intimidate people like that. It's not okay and you could tell the owners were shaken up."
The man with the gun has still not been caught by police, who say they are reviewing CCTV footage and "following some positive lines of inquiry".