NEW YORK — Heading into the fourth quarter, handbag makers say 1994 is turning out to be a successful year at the mass market level, thanks in large part to backpacks and other functional items.

Many major vendors are reporting year-over-year gains ranging from 5 to 20 percent. Some stretch even higher. Most say they hope to ride the crest created by this year’s big sellers into next year by expanding these categories — mini-backpacks and handbags with built-in wallets and other add-ons, for example.

The gains bode well for mass accessories business in general. Vendors say handbags are the single largest accessories category for discounters and other popular-price chains, accounting for an estimated 60 percent of volume for the department.

Among vendors, Bijoux International, a multicategory accessories company, was posting gains of 40 percent in its Eastport bag division, although it had projected only 25 percent increases here, according to Arthur Grayer, vice president of sales. The boom, Grayer said, has been almost entirely backpack-driven.

“The business has become so huge that we ended up making a bold move by phasing out our handbag line almost completely,” he noted. “It’s a piece that sells across just about every lifestyle, in every color and fabrication you can think of.”

Grayer added that his firm was pegging the backpack as next year’s runaway handbag department bestseller, as well.

John Bihn, president of Monique Handbags, said the backpack has become “the handbag of the Nineties.” He cited backpacks as a top reason for this year’s brisk pace.

The company is currently showing mini-backpacks. Bihn said he sees such items staying on a roll into next year, but added that he expected oversized tote bags to come on strong as well.

“We’ve found that after the success of very small handbags, or backpacks, in this case, very big bags tend to come into demand,” he noted.

In the meantime, to keep on top of the backpack trend, Monique is taking cues from the upscale bag business and developing sophisticated nylon models in the style of Prada and other such high-end firms.

“We’re finding that when business in better bags is strong, our business also gets hot,” Bihn said. “A budget customer is not suddenly going to start spending $300 or more on a designer nylon backpack, but she will spend a few dollars more to get that same sort of look in a budget bag.”

Monique has had success this year in multifunctional handbags, he noted.

An emphasis on function has been key for Baggo Imports, according to Adriane Geiger, merchandise manager.

“Multicompartmental bags with value-oriented add-ons have been among our top growth items this year,” said Geiger, who said her company is posting moderate increases.

“When a bag comes with a four-in-one wallet attached at little or no extra cost, the amount of value perceived by the consumer increases exponentially,” she pointed out. “It’s what people are really looking for now, more for the money.”

Mini-backpacks have also been a boom area, Geiger added.

“In April, we introduced just one style in one color, and it’s been selling ever since,” she said. “In fact, it’s booked through the holiday season.”

For 1995, she said, the company is “planning aggressively” and going forward with backpacks and multifunction items as well as fabric totes, a business she said is becoming “explosive.”

At Accessory Network, handbags have been on an upswing for two seasons, according to Abe Chehebar, chief executive officer. He said strong sell-throughs over the counter were the result of successful new items.

“Sometimes all you need is a good item to push business,” he noted.

Chehebar said his firm has seen “decent increases in sales in recent years, with this year being a bit higher than average.”

For Accessory Network, leading handbag items this year have been mini-backpacks, particularly those sporting decorative embellishments or outdoor looks. The outdoor look has been especially strong. The wallet-on-a-string, which is considered a hybrid of small leather goods and handbags, has also been a major-league seller this year, Chehebar said, adding that by yearend his firm will have sold several million units.

Chehebar said he expected increases to continue in 1995, with gains coming from the ever-expanding number of mass outlets, as well as continued product development. One new handbag group, for instance, features attached, color-coordinated, wallets-on-a-string, and generated good response when previewed during the recent accessories market.

But even in the face of the backpack and multifunction crazes, basic bags have remained the mainstay for several mass market vendors.

Paul Kopyt, president of Sarne Corp., said his firm’s sales were running about 20 percent ahead of last year.

“Our increases this year are a result of things we’ve been doing for the last several years,” Kopyt said. “We’ve really defined who we are and concentrated on basic casual business in merchandising and new operational programs, such as order replenishment through EDI.”

He said the mass market was still a growing area for his company, and he anticipated that 1995 would see even greater increases than this year.

Lisa Steinberg, executive vice president of product development at Bag Bazaar, said growth this year was about 5 to 10 percent, a slightly better gain than last year.

“Basics at a price were key this year,” Steinberg said.

But she said consumers were ready for more novelty items, as evidenced by the success of backpacks and wallets-on-a-string. To keep up with demand, she added, Bag Bazaar plans to expand its tapestry and novelty fabric offerings and remain price-oriented.