Yes, but in countries like the UK a shop selling fake watches would not last very long before the authorities shut it down.
If you have hundreds ar even a few watches you have paid $1-200 dollars each for, that is a lot of money to lose. Plus the probable prison sentance. Plus losing the legal side of your business as well.
In addition to that, as Trailboss said, you would have the lawyers of the genuine watch companies hauling you through the courts if you were selling reps on a reasonably large scale basis in the UK, US, Australia etc.
I have spent most of this year in Thailand, and there are hundeds of shops selling reps as the authorities really dont care. The challenge, though, is to find a shop you trust who have good reps, and will fix them if there are any problems.