So it is useless, according to you, to spend money before Arx island ? So, I come back to what I said, it is really a shame to get the best stuff in the very last moments of the game. You can not fully enjoy your stuff.
The thing is, the moment you level up, all shops sell new items at your current level, rendering your old equipment outdated. This becomes more detrimental on higher difficulties. Whether it is useless to spend money to buy new equipment or not, depends on whether you think your current equipment can still keep up with the progress of enemy level. If everywhere you go you see enemies 4-5 levels above the levels of your equipment, and you have trouble beating them, then you should shop for new stuff, and that doesn't make your shopping "useless".
But clearly a lot of the "best stuff" will be found near endgame, because of the way item scaling works. Except for some old items you keep because of their useful effects.
You can find physical weapons from Tarquin, a general trader in the market, a dwarf woman near the market who also sells Warfare skillbooks. There's a woman in the market who exclusively sells Hunstman skillbooks, bows/crossbows, and arrows. The spellbook traders are around the area too.