They called the shooting of the robber self-defense, and the shooting of the bystander an accident.
The incident happened after 4 p.m. Sunday along the 2800 block of North 5th Street.
According to detectives, it all started when the suspect walked in to the store.
"He had a knife on him. He pointed at the owner and demanded the owner give him cash," said Philadelphia Police Captain George Fuchs.
Police say the owner gave the cash, but then gave chase. But before running after the bandit, police say the owner grabbed his five-shot revolver, which he did have a license for.
Elvin Gonzalez saw what happened next.
"Next thing you know ,I just hear 'boom, boom, boom, boom, boom'. People ducking bullets in the air, and I'm like, 'Whoa what's going on?'" said Gonzalez.
Detectives say the owner fired all five bullets in the gun.
In a turn of events, just before the owner fired, the suspect tossed the cash on 5th Street.
"The suspect took the money, which is about $2,000 according to the owner, and basically tossed it into the air," said Captain Fuchs.
"People running north, south, east, west, and then all of sudden I'm like, 'Wait - why are people coming back?' Because they seen the money flying through the air," said Gonzalez.
All the cash was stolen by bystanders.
Police say the suspect, a 40-year-old man, was shot twice in the chest. Someone can be seen on camera dragging his limp body to the curb.
According to investigators, the suspect turned and raised his hand while being chased by the owner, and the owner feared the man had either a knife or a gun, so he opened fire.
We spoke with another 5th Street store owner, who supports what his neighbor did.
"The young man from there told him, 'Please stop, stop,' three times in a row, and the guy turns around and says, 'I will shoot you first'. Hey, he needs to defend himself because he just threatened the poor guy," the store owner said.
In the laundromat incident a bystander, a 52-year-old woman, was also shot twice in the hand.
Both she and the suspect were rushed to Temple University Hospital.
The suspect was last reported to be in critical condition, while the bystander was said to be in stable condition.