When playing with a friend (or just using another controller) keep playing until you come to a shopkeeper. Have the second player (person without the flag) pick it up. Then using the main character (person with the flag) proceed to finish the level while the other player sits in the shop holding the desired item. You do have to beat the level before the person's time runs out or he will die and you won't get the item. Also if you pick up any item that you can hold onto (jetpack, cape, mattock) it'll duplicate and both you and the other player can have that item. All other items will go to the player that held them in the shop. Simply kill them off and take them for yourself if you so choose.