"It's certainly a tragic event when a man going about his business, a 69-year-old security guard, gets involved in an assault and dies and it just compounds that when there are a five-year-old and three-old child at the scene."
Mr Schulz suffered serious injuries and reportedly went into cardiac arrest before being taken to Royal Prince Alfred Hospital where he was pronounced dead.
Police are appealing for a third person who was at the scene to come forward.
The woman, named Raylene, was not a suspect in the alleged attack, Supt O'Toole said.
"I'm just shocked, I still can't believe it's true," a local shop owner told Macquarie Radio.
Other shop owners described Mr Schulz as a "lovely person", a journalist tweeted.
-AAP