According to witnesses in Westfield Parramatta, western Sydney, the woman pulled out a weapon during an argument in Woolworths on Wednesday.
Police say no-one was injured in the reported incident which happened at 1.30pm.
A woman was being spoken to by police officers at the scene but no arrests were made.
It comes after shoppers cleared out the toilet roll aisles in supermarkets all over Sydney amid a mass panic.
Certain stores have imposed a strict one-packet limit per customer to prevent stockpiling.
While toilet roll manufacturers have assured shoppers that the likelihood of running out is slim, with more rolls being produced to meet the spike in demand.
Kimberly-Clark, the company behind Kleenex, operates a large production factory in Millicent which pumps out toilet paper seven days a week.
Manager Adam Carpenter said: 'We have the ability to respond to demand fluctuations very quickly.'