Japanese broker Nomura Securities has been looking at the UK electrical retail sector ahead of the entrance, in partnership with Carphone Warehouse, of US player, Best Buy, and tips DSG International as the best stock to be holding.'The middle market is increasingly competitive, causing a divergence in the major electrical players. DSGi, KESA, Best Buy and John Lewis are all seeking a service-led premium offer. Commoditisation of technological product has driven a price-led, low service model at Tesco and Argos [owned by Home Retail]. This divergence is likely to be accentuated in our view,' Nomura said.Nomura notes that 50% to 60% of DSG's Currys and PC World stores will be refitted by Christmas 2010 as it seeks to reposition the business as a service-led electrical specialist. This ongoing transformation has not been reflected in the company's share price in Nomura's view, and the broker has reiterated its 'buy' recommendation and 35p price target. 'KESA may need a more differentiated approach: Despite being early to the service-led model, the UK offering is not sufficiently differentiated, making KESA more vulnerable if Best Buy fulfils its potential, in our view. New management may need a medium-term strategy to defend its current market share. We maintain our Neutral rating but caution on the longer-term outlook,' Nomura's Christopher Walker said.Carphone Warehouse, meanwhile, offers 'investors a free option on a successful retail launch' by Best Buy, in Nomura's view. The broker rates the stock a 'buy' and has a price target of 230p.