The men were believed to have waited in a car parked outside the Mellor St Video Ezy store before entering at 10.50pm, Detective Sergeant Malcolm Inglis, of Dunedin, said.
The store's female manager, the sole occupant, was in the storeroom when she heard what she believed were customers coming to the front counter, he said.
When she came out of the storeroom, the men, brandishing 40cm-long machetes, demanded cash.
One of the men held a machete towards the manager, who was ordered to take money from the till, then from the storeroom, handing over what is believed to be several hundred dollars.
Before leaving, the men ordered the woman to lie on the ground.
When she heard a car leaving the car park, she phoned the police.
Police officers were there within minutes, but nobody had been arrested, Det Sgt Inglis said.
The video camera at the store was not working at the time. The men are believed to be Polynesian, perhaps Maori, wearing black hooded sweatshirts and black jeans.
Their faces were covered with scarves.
One of the men wore sunglasses.
One man was described as 185cm tall and of lanky build, with his accomplice about 180cm in height and of average build.
Both men are believed to be in their early 20s.
The machetes were about 40cm long and were not new, Det Sgt Inglis said.
"They were very threatening towards the manager and she was left in no uncertain terms that they meant business."
The manager was believed to be filling in for an employee who could not work that shift.
The store was closed yesterday morning as police investigated the scene.
The manager said she was "very scared", but declined to comment further.
Det Sgt Inglis appealed for people in the area who might have spotted a getaway vehicle to contact the police.
"There must have been a bit of traffic around there at that time of night, so we are asking for information from the public."
"The video store is next to the Cableways Tavern and someone may have seen the men acting suspiciously in the car park before the armed robbery," he said.
The robbery was not believed to be connected with other recent robberies in Dunedin.
