The shooting happened just before 12:30 p.m. near the store, located at Melrose and North Genesee avenues.
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A 26-year-old man, identified by loved ones as Jayren Bradford, was shot and taken to a nearby hospital, police said. The LAPD later confirmed he had died.
The suspect fled the scene and remains on the loose.
Witnesses and investigators said the incident started with a dispute over a raffle the store was holding over a pair of sneakers. The employee who was shot was just arriving to work and saw a crowd arguing outside the store and tried to intervene.
A witness said the employee appeared to be trying to de-escalate the situation and was backing away when he was shot.
Video shot by an eyewitness shows the employee backing into the street away from several men, with several store employees also nearby. One of the men suddenly pulls a gun and fires once. The group then scatters in the other direction as bystanders seek cover.
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A sign in the store window indicates the raffle was for a pair of Nike Dunk Low sneakers in Black Multi Camo color scheme. Nike is expected to release the sneaker to the public on Aug. 18, for a retail price of $110, though some online sellers are already listing it for $150.
Police say there are many cameras at stores in the area and they expect to take several days to retrieve and review all the footage.
Loved ones gathered outside the shoe store Wednesday night for a memorial to honor Bradford.