You can buy upgrades from the shopkeeper before you start a loop through the 3 rooms, if you fail during the cycle, you get sent back to the item shop and can use the gold you collected to buy items. If you make it through the cycle of 3 rooms, the difficulty of the cycle increases and you get sent to the item shop to purchase upgrades before you start another run.
You can talk to the shopkeeper in the item shop by approaching him pressing the “A” (L key) button when you’re facing and up against him.
Great question! I’m glad you enjoyed the game.